What happened
RBA Governor Michele Bullock warned parliamentary lawmakers that Australian inflation remains too high, driven by persistent oil prices, AI data centre demand, and weather events. Financial markets are pricing an 82% probability of a 0.25 percentage point cash rate increase to 4.6% at the board's meeting on September 28-29, which would mark the highest benchmark rate in 15 years.
Why it matters here
A rate hike to 4.6% directly raises debt servicing costs for Australian households and companies, curbing discretionary consumer spending and compressing equity valuations. Major banks including Westpac have brought forward their rate hike expectations to September, with risks of follow-up tightening, signaling prolonged restrictive monetary policy for local wealth portfolios and property markets.
What to watch
The outcome of the RBA Monetary Policy Board meeting on 28 and 29 September 2026, alongside subsequent monthly Australian consumer price index updates and official wage growth statistics.
Source
smh.com.au