RBA expected to start raising rates again after May inflation data

Expectations are growing that the Reserve Bank will resume its run of interest rate increases in the next couple of months after hotter-than-expected inflation data.

Speculation of another interest rate increase went into overdrive on Wednesday after the release of monthly CPI data, which came in at 4 per cent in the 12 months to May.

Traders have factored a near 80 per cent chance of additional tightening by November and it spurred investors to embolden bets of another hike as soon as August.

Separate job vacancies data released on Thursday pointed to a further weakening in the jobs market, after the number of advertised positions slipped 2.7 per cent to 352,600 roles in May.

Get in front of tomorrow's news for FREE

Journalism for the curious Australian across politics, business, culture and opinion.

READ NOW

That figure was 17.7 per cent lower than 12 months earlier, suggesting the RBA’s aggressive run of 13 rate hikes since May 2022 are working to crimp demand and slow the economy as intended.

Reserve Bank Governor Michele Bullock during a press conference following Tuesdays decision to keep interest rates on hold. NewsWire / Nikki Short Credit: News Corp Australia

The RBA’s target for inflation is between two and three per cent, and interest rates are their instrument to bring it to the midpoint.

Judo Bank chief economist Warren Hogan told Sky News on Thursday the inflation numbers “are pretty bad”.

“It’s really unfortunate, it’s not good news at all and I think there’s a chance that they’ll go in August and September,” Mr Hogan said.

“This government stimulus in the form of tax cuts and cost of living provisions would maybe force them to go again in November.”

More to come