Australia's central bank held its cash rate steady at 4.35% for a second straight meeting but warned it might hike again if needed to control inflation. Reserve Bank of Australia Governor Michele Bullock said she personally thought it was quite possible that rates may need to go up again, keeping alive the risk of a fourth rate increase this year. The RBA said aggregate demand needed to stay subdued to reduce capacity pressures and it would do what was necessary to bring inflation back to target, including increasing the cash rate target further if upside risks materialise. Swaps now imply around a 50% chance of a rate increase in November, while pricing in an 80% likelihood of a move by early next year. Updated RBA forecasts showed inflation is now expected to move back to the 2% to 3% target band in the second half of next year, with consumer price inflation projected to ease to 3.6% by the end of the year from 3.9% in the second quarter and to 2.6% by the end of 2027.
RBA signals possible rate hike, pushing Australian bond yields up.
