What happened
Commonwealth Bank economists brought forward their official forecast for the next Reserve Bank cash rate increase from November to September. The major bank now expects a 25 basis point rate hike next week, citing worsening economic conditions and escalating petrol prices that continue to drive underlying domestic inflation higher across Australia.
Why it matters here
For Australian investors and mortgage holders, a rate increase would push monthly repayments up by hundreds of dollars on typical home loans. Higher interest rates also raise borrowing costs for businesses, increase discount rates on equity valuations, and make defensive fixed income assets relatively more attractive compared to growth equities.
What to watch
The Reserve Bank of Australia board meeting decision on September 29, along with upcoming monthly labor force and purchasing managers index economic releases.
Source
commbank.com.au