Macquarie Joins Major Banks Forecasting September RBA Rate Hike
Synopsis
Macquarie Bank has joined a growing group of lenders forecasting a September RBA rate hike, as stubborn inflation and strong economic conditions increase pressure on the central bank to lift borrowing costs to a 15-year high of 4.60%.
Australia’s interest rate outlook has taken a sharper turn, with Macquarie Bank becoming the latest major lender to forecast a Reserve Bank of Australia rate hike at its September meeting.
Macquarie chief economist Ric Deverell expects the RBA to raise the cash rate by 25 basis points to 4.60% when the board meets on September 28 and 29.
If delivered, it would take borrowing costs to their highest level since November 2011.
The RBA currently holds the cash rate at 4.35% after three increases earlier this year.
Inflation Keeps Rate Hike on the Table
The forecast follows increasingly hawkish signals from senior RBA officials. Assistant Governor Sarah Hunter said the board may have to raise rates if inflation proves stronger than expected, while Deputy Governor Andrew Hauser said inflation remains the central bank’s “one big problem.”
Hauser said the Australian economy was performing relatively well, with unemployment near historic lows and real household incomes growing strongly. However, inflation remains above the RBA’s 2–3% target range.
July’s consumer price data added to those concerns. Headline inflation remained at 3.5%, while the trimmed mean, the RBA’s preferred measure of underlying inflation, stayed at 3.6%, both above the central bank’s target.
Banks Split on Timing
Macquarie’s September call comes as economists remain divided over whether the RBA will act this month or wait until November.
NAB is also forecasting a September increase, while Westpac, Commonwealth Bank and ANZ have been pointing to November as the more likely timing. Westpac chief economist Luci Ellis recently shifted her forecast to a November hike but acknowledged that September remains possible.
The prospect of higher rates is already weighing on households. Westpac’s September consumer sentiment index fell 5.2% to 84.4, with mortgage holders recording a particularly sharp decline in confidence.
If the RBA delivers another 25-basis-point increase, millions of Australian borrowers could face higher repayments as the central bank prioritises bringing inflation back within its target range.
Source: Nine News
Vishal is an experienced Editor at Inspirepreneur Magazine with key interests in artificial intelligence, eCommerce, entrepreneurship, lifestyle and startup sector. Prior to joining Inspirepreneur, he was a Content Writer cum Correspondent at Siliconindia Magazine, where he worked on Company Profiles, Cover Stories, Executive Profiles, Feature Articles and Thought Leadership content.
