RBA Decision in Focus as Markets Lean Toward a Hike

• The backdrop into today’s RBA decision has firmed, with sticky inflation and a tighter than expected labour market boosting the case for higher rates with markets now forecasting a 75% chance of a hike.
• Headline CPI at 3.8%, trimmed mean inflation above the target band, and unemployment at 4.1% highlight ongoing price pressures and labour market tightness.
• A stronger AUD could do some of the tightening for the RBA, potentially tempering the need for an immediate hike as policymakers lean on guidance and “jawboning” to cool the economy.
• The 2:30pm decision and tone will be key in shaping near-term rate expectations and market direction.