Citigroup: The RBA is expected to raise interest rates by 50 basis points next week

Citigroup chief economist Josh Williamsom said the Reserve Bank of Australia is expected to announce a ninth consecutive increase in official interest rates next Tuesday and may announce an increase in inflation expectations.

Such a revision would be incompatible with a shift to neutral guidance, Williamsom said. Williamsom believes that the risk of the meeting tends to be hawkish, and the possibility of raising interest rates by 50 basis points is “not small”. He added that with the official cash rate (OCR) rising to 3.35%, the real cash rate will remain negative, so the bank needs to tighten monetary policy further in order for nominal rates to be more effective in reducing inflation in the coming months.