Economists warn the Reserve Bank’s latest interest rate rise is unlikely to be the last, with markets pricing in further hikes this year.
Economists at National Australia Bank say the Reserve Bank of Australia’s decision to lift interest rates does not appear to be a “one and done” move.
Following Tuesday’s rate hike, financial markets are now pricing in another increase at the RBA’s May meeting, with a growing chance of additional tightening by the end of the year.
The Australian dollar surged back above 70 US cents overnight, reaching three-year highs and signalling investor confidence that the central bank still has work to do to rein in inflation through 2026.
RBA governor Michele Bullock described the move as an “adjustment” rather than the start of a new hiking cycle.
However, NAB’s head of markets research, Skye Masters, said the risks were skewed towards further tightening.
NAB expects the RBA to deliver another 25 basis point rate hike in May and warned that cumulative increases could exceed 50 basis points if inflation pressures persist into next year.
