What happened
Senior RBA officials have presented a united front that inflation remains above target. Money markets expect a 25-basis-point cash rate increase to 4.60% at Tuesday's policy meeting, with a total of 40 basis points of additional tightening priced in by May. Meanwhile, Australian employment grew by 39,000 in August, pushing the unemployment rate up to 5-year highs of 4.6%.
Why it matters here
For Australian investors, higher risk-free yields increase borrowing costs across the economy and compress equity valuations, particularly in growth and property sectors. As cash rates approach 15-year highs, income-seeking investors gain higher defensive cash yields, but extended monetary tightening increases recession risk and weighs on consumer-facing businesses.
What to watch
The RBA monetary policy decision statement at 2:30pm AEST on Tuesday, followed by Governor Michele Bullock's press conference at 3:30pm AEST and Wednesday's quarterly inflation data release.
Source
judo.bank