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2026-11-02 14:16:31
[RBA Expected to Raise Rates to 18-Year High This Week, Inflationary Pressures Outweigh Employment Concerns] 1. The market widely expects the Reserve Bank of Australia (RBA) to raise its policy rate to 4.85% on Tuesday, a 18-year high. Stubborn inflationary pressures have offset the impact of rising unemployment, becoming the main factor driving the rate hike. 2. The RBA's preferred core inflation gauge—the trimmed average of the third-quarter CPI—rose 1.0% quarter-on-quarter, significantly higher than the 0.6% previously considered ideal by RBA Governor Bullock. Bullock subsequently stated that inflation is too high, and domestic demand pressures remain one of the factors pushing up inflation. 3. Employment will be a key focus of discussion on the Monetary Policy Committee. The August unemployment rate was revised upward to 4.7%, a five-year high, and remained at that level in September. Rising unemployment may limit the RBA's room for further rate hikes in the future, but Bullock's previous comments indicate that we are not yet at that stage. 4. The minutes of the last meeting showed that the committee remains concerned about the upside risks to inflation, and officials continue to send the core signal: prepared to tighten monetary policy if necessary. 90% of economists surveyed expect a 25 basis point rate hike on Tuesday, with market focus on the policy statement and subsequent press conference. The Australian dollar has found good support against the US dollar recently, but 0.7140 and 0.7280 constitute key resistance levels. To break through these levels, the Reserve Bank of Australia (RBA) needs to significantly strengthen its hawkish stance; if the rhetoric becomes more dovish, the Australian dollar may face downward pressure, potentially falling towards 0.6865 against the US dollar.
