SYDNEY, Aug 27 (Reuters) – The Commonwealth Bank of Australia and the National Australia Bank on Thursday joined ANZ in forecasting another rate hike this year after a hot inflation print reignited fears that price pressures remain elevated in the economy.
NAB, in fact, forecast an imminent rise from the Reserve Bank of Australia at its next policy meeting on September 29-30, arguing that the risk is biased towards an additional hike in November if economic activity stays resilient.
CBA and ANZ
“While one monthly result needs to be interpreted cautiously, the renewed strength across a range of underlying and domestically influenced prices suggests the pace of disinflation has stalled,” said Belinda Allen, head of Australian economics at CBA.
“Based on recent RBA communications, we expect this upside surprise to CPI will see the RBA hike the cash rate (in November)… The risk sits with an earlier September hike.”
The RBA held interest rates steady at 4.35% this month for a second consecutive meeting after three rate hikes this year aimed at taming inflation. Policymakers have warned that they would hike again if inflation risks build.
Markets now see a 50% chance that the RBA would hike interest rates to 4.6% in September, up sharply from just 17% before the inflation data. A total tightening of 30 basis points is now priced in by February next year.
(Reporting by Renju Jose and Stella Qiu in Sydney; Editing by Muralikumar Anantharaman)
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