BOJ Rate Hike Expectations Rise Ahead of September Meeting 
UK Economy Posts Surprise June Growth as World Cup and Hot Weather Lift Activity 
European Stocks Steady as U.S.-Iran War, Euro Zone Data Keep Investors Cautious 
Japan PM Sanae Takaichi Unveils Growth Plan as BOJ Independence Concerns Lift Bond Yields 
Canada-US Trade Talks Gain Momentum Ahead of Aug. 19 Tariff Deadline 
Asian Currencies Edge Higher as Soft US Inflation Weighs on Dollar 
Strait of Hormuz Shipping Near Standstill After New Vessel Attacks 
US Dollar Slips as Weak Retail Sales Reduce Fed Rate Hike Bets 
Asian Currencies Steady as Dollar Holds Firm After U.S. Inflation Data 
S&P 500 Hits Record High as Soft Inflation Data Eases Fed Rate Hike Fears 
Trump Imposes New Tariffs on Drone Imports Over US Security Concerns 
BOJ Rate Decision in Focus as Sticky Inflation, Weak Yen Shape USD/JPY and Nikkei Outlook 
Iran War Escalates as US, Houthis Target Ships Near Key Oil Routes 
Add as a preferred source on Google
The Reserve Bank of Australia (RBA) increased its benchmark interest rate by 25 basis points to 4.35% on Tuesday, a move widely anticipated by markets. The decision reflects growing concerns over inflation, particularly as global uncertainties—such as the ongoing conflict in the Middle East—continue to pressure energy markets and overall price stability.
Eight out of nine members of the RBA’s policy board supported the rate hike, signaling strong consensus around tightening monetary policy. The central bank emphasized that inflation remains above its target range of 2% to 3% and is expected to stay elevated for an extended period. As a result, maintaining a restrictive policy stance is seen as necessary to bring inflation under control.
The RBA revised its inflation outlook upward, forecasting consumer price index (CPI) inflation to reach 4.0% this year, compared to its previous estimate of 3.6%. Core inflation, measured by trimmed mean CPI, is now projected to hit 3.5% by the end of 2026, also higher than earlier expectations. These revisions highlight persistent inflationary pressures, partly driven by supply disruptions linked to geopolitical tensions.
At the same time, the central bank downgraded its economic growth forecast. Australia’s GDP is now expected to grow by just 1.3% in 2026, down from the prior estimate of 1.8%. This reflects the balancing act between controlling inflation and sustaining economic activity.
Despite the latest increase, the RBA acknowledged uncertainty regarding how restrictive current monetary conditions are. Financial markets are already pricing in the possibility of another rate hike, potentially as soon as June. Analysts from Capital Economics predict the cash rate could peak at 4.60% by August, with further increases possible if inflation continues to exceed expectations.
Following the announcement, the Australian dollar weakened slightly, with AUD/USD falling around 0.2%. Meanwhile, the ASX 200 index also declined, reflecting cautious investor sentiment in response to tighter financial conditions and ongoing global risks.
