GDP Surprises to the Upside as Rate Hike Bets Build

• Australia’s economy expanded 0.4% over the June quarter and 2.1% year-on-year, with household consumption up 0.4%, driven by a pickup in discretionary spending.
• The result came in slightly ahead of the RBA’s own forecast of 1.9% year-on-year from their latest Statement on Monetary Policy, confirming growth has eased modestly from late 2025 but has broadly tracked around trend over the past year.
• A firmer growth outcome alongside a tick higher in unit labour costs will do little to ease the Board’s unease heading into the September meeting, with rate markets taking note and now pricing the probability of a September hike at just under 70%.
• New York Fed President John Williams helped steady markets overnight, pointing to continued progress on inflation as tariff effects diminish and elevated energy prices show little sign of bleeding into broader services.
• On the domestic calendar today, the July goods trade balance is due alongside scheduled appearances from RBA’s Brad Jones and Sarah Hunter.