RBA Poised for 25bps Hike; Market Focus Shifts to Forward Guidance

• RBA expected to hike 25bps to 4.60% on September 29.
• Market focus on RBA statement and Governor Bullock’s press conference.
• Hawkish guidance could support AUD, dovish tone may weigh.

The Reserve Bank of Australia (RBA) is broadly anticipated to increase its cash rate by 25 basis points (bps) to 4.60% at its upcoming meeting on September 29. This expected tightening is driven by persistent inflation pressures, resilient labour demand, firmer GDP figures, and elevated energy costs, with 33 out of 34 economists forecasting the move. Given that the 25bps hike is largely priced into market expectations, the Australian dollar (AUD) and the front end of the yield curve are unlikely to see significant movement from the decision itself. Instead, market participants will closely scrutinize the RBA’s official statement and Governor Bullock’s press conference for indications of future policy direction. A hawkish stance, signaling openness to further hikes, could provide support for the AUD and push front-end yields higher, while a clear ‘one and done’ message might remove tightening premium from the currency. This move would also place Australia’s policy rate further above many of its G10 peers.