Overview
- Major banks including CBA, NAB and ANZ have revised their forecasts to include a 25 basis‑point increase that would lift the cash rate to 4.60 percent, with timing split between September and November and Westpac the notable holdout.
- Citing July's CPI, which showed headline inflation at 3.5 percent year‑on‑year and a trimmed mean around 3.6 percent, economists say underlying price pressures remain well above the RBA's 2–3 percent target.
- Financial markets quickly repriced policy odds after the inflation surprise, putting roughly a 50 percent chance on a September hike and pricing about 30 basis points of additional tightening by February.
- Housing and construction costs have been singled out as a key transmission channel, with rising building input prices and a large contribution from housing to annual inflation prompting RBA officials to warn of pass‑through to consumer prices.
- The RBA remains data dependent at a 4.35 percent cash rate, and upcoming labour, GDP, monthly CPI and home‑value reports will determine whether the board acts next; higher near‑term rates would raise mortgage costs and squeeze household budgets while a sharp housing slowdown could reduce pressure on prices.