29/09/2026
Betashares Chief Economist David Bassanese - "As widely expected, the RBA raised the cash rate by 25 basis points to 4.60%. The tough tone of the RBA Statement, moreover, suggested there's a good chance of another rate rise before Christmas.
For starters, the Board's decision was unanimous. The Board also explicitly warned that it may raise rates again if needed.
The reason for the RBA’s hike today is because it saw the upside inflation risks it identified back in August “materialising”. The most concerning development was the rebound in oil prices due to the ongoing conflict in the Middle East. A second concern is that the AI investment boom is both supporting global economic activity and pushing up prices for technology-related goods. For now, AI is acting as a positive demand shock, although it could eventually lift productivity and supply.
Ominously, the Bank noted that local firms are facing higher costs and are either raising prices or "looking to do so". This suggests that inflation could rise even further in the months ahead.
Sadly, Australia looks set for a period of stagflationary conditions, with weak growth alongside stubbornly high inflation. While inflation remains above target, the RBA has limited tolerance for price pressures becoming entrenched.
In unwelcome news for mortgage holders, it’s now my base case that the RBA is now a short-priced favourite to raise rates by a further 25 basis points on Melbourne Cup Day, taking the cash rate to 4.85%."
