RBA Set to Deliver Back-to-Back Hikes

Good morning and welcome back. The Reserve Bank delivers its second interest-rate decision of the year tomorrow, and it’s shaping up to be another hike. Since the bank’s last meeting, the inflation outlook has grown more complicated as a fresh energy shock — driven by conflict in the Middle East — ripples through global markets. Money markets are pricing a three-in-four chance of a rate rise in March and see more tightening to come.
The RBA is among a slew of central banks convening this week. The Federal Reserve, the European Central Bank and the Bank of England are all expected to keep borrowing costs steady as they assess how much surging energy costs will feed through to consumer prices and growth. For the central banks that are about to set policy — overseeing about two-thirds of the global economy in total — the tone will turn more cautious as they acknowledge the risk of another inflation shock. — Ainsley Thomson, Wellington Bureau Chief

Staying with those price pressures, households are likely to face increased cost-of-living pain, with the inflation rate set to rise above 4.5% as the oil price climbs, Treasurer Jim Chalmers said. “If we were putting pencils down on those forecasts today, we’d have inflation peaking somewhere between the mid-to-high fours, ” Chalmers said in an interview on Sky News.