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'Stand Ready' for More Interest Rate Rises, IMF Says
The IMF said resilient spending and higher energy costs could keep inflation elevated, with markets pricing an 87% chance of another RBA hike.
On Wednesday, the Federal Reserve lifted the target interest rate range to 3.75% to 4.00%, prompting local analysts to prepare for the Reserve Bank of Australia's upcoming policy meeting on September 28-29.
Amid persistent inflation pressures and uncertainty regarding financial conditions, the International Monetary Fund said on Thursday that the Reserve Bank may need to raise interest rates further.
Moomoo Australia and New Zealand chief market strategist Tapas Strickland warned that local equities would "face a testing morning," noting that while the rate hike was priced in, the accompanying message surprised investors.
Markets are currently pricing an 84% likelihood that the Reserve Bank will deliver a 25-basis-point rate rise to 4.6% on September 29, reflecting expectations for further monetary tightening.
Returning inflation to target is the International Monetary Fund's 'top priority,' as markets imply the cash rate could reach 4.85% by early 2027 amid ongoing efforts to tame stubborn secular inflation.