What happened
AMP economist My Bui forecasts the Reserve Bank of Australia will raise the cash rate to 4.6% later this month. Trimmed mean inflation has remained flat at 3.6% for three consecutive months. The stubborn inflation print is driven by rising fuel prices exceeding $2 per litre and minimum wage increases of up to 6%.
Why it matters here
A fourth rate hike in under 12 months moves the official cash rate above the previous cycle peak of 4.35%. Higher rates directly increase debt servicing costs for Australian businesses and mortgage holders, while reducing disposable household income and placing downward pressure on equity valuations and asset prices across domestic markets.
What to watch
The RBA board decision later this month and upcoming official inflation statistics for signals on monetary policy trajectory.
Source
equitymates.com