RBA’s Hunter backs more hikes as inflation risks entrench

The Reserve Bank of Australia (RBA) Assistant Governor Sarah Hunter confirmed the need for further rate hikes this year, to keep inflation in check. This has increased the chances for a rate increase at the September 29 meeting.

In a podcast, Hunter stated the board’s concern that inflation has been too high for too long, with increasing risks of it becoming entrenched. Hunter added that “We can see lots of reasons why inflation might be a bit higher than what we currently think.”

Traders should note that the RBA has raised rates three times by 75 basis points this year, bringing the cash rate back to post-pandemic levels of 4.35%.

Money markets forecast a 94% probability that the RBA will increase rates by 25 basis points at the September 29 meeting, with expectations centered around this move, as per Prime Terminal.