It seems that the Reserve Bank of Australia (RBA) may have to return to raising interest rates again, as inflation in Australia continues to rise.
According to the Consumer Price Index report released today, the index rose to 4.0% compared to 3.8% last month, this rise in inflation pushed the Australian dollar higher against the US dollar.
Price pressures continue to grip Australia, and although these figures are considered monthly, they provide an idea of the overall direction of the economy.
The quarterly report is still the most scrutinized, but the current readings cannot be ignored.
The main point here is that inflation is still well above the Reserve Bank of Australia's target range of 2% to 3%, in recent months price pressures have become more resistant.
Interest rate hikes are likely to come back to the fore, especially after Reserve Bank of Australia Governor Michelle Bullock said that they discussed the possibility of raising interest rates last week.
August is expected to be a difficult month, as the odds of the Reserve Bank of Australia leaving the interest rate unchanged fell to about 67%, from almost 88% before the release of inflation data today.
Market expectations for an interest rate hike in September also rose to about 40%, compared to about 12% the day before.
Thus, the CPI report for the second quarter, scheduled for release on July 31, will serve as a decisive indicator for the RBA before its meeting on August 6 next.
