What happened
Former Reserve Bank of Australia board member Ian Harper stated that another interest rate increase before the end of the year is plausible. His comments follow the central bank's September decision to raise the cash rate to a 15-year high of 4.60%. Financial markets are currently pricing in a one-in-three chance of a rate hike at the November meeting.
Why it matters here
Another rate hike would further squeeze household cash flows, lower borrowing capacity, and increase debt servicing costs for Australian businesses. For investors, sustained high interest rates maintain pressure on growth equities and property valuations while keeping cash yields and short-term fixed income attractive.
What to watch
The ABS September quarter Consumer Price Index data released on 28 October, which remains the decisive input before the Reserve Bank's next monetary policy meeting on 3 November.
Source
abc.net.au