DBS Group Research said markets had already absorbed much of the expected Reserve Bank of Australia rate increase, putting the bank’s Tuesday guidance in focus for the Australian dollar.
Senior FX strategist Philip Wee assessed the expected quarter-point move as mostly reflected in the currency. It would lift the cash rate to 4.85% from 4.60%, he said in a Nov. 2 research note. Wee warned that a pause, or an increase accompanied by a signal that rates are near their peak, could disappoint currency traders.
Australian inflation accelerated in September. The Australian Bureau of Statistics (ABS) reported that consumer prices rose 4.3% over the 12 months to September, up from 4.0% in August. Trimmed mean inflation, which reduces the effect of some price swings, reached 3.6%, compared with a revised 3.5% in August. The Reserve Bank of Australia (RBA) targets inflation of 2% to 3%.
The ABS also reported that seasonally adjusted unemployment increased 0.1 percentage point to 4.7% in September. Employment fell by 39,300 to 14,782,700 people.
The RBA announced four cash rate increases in 2026. Its latest move, announced Sept. 29, took effect Sept. 30 and lifted the target to 4.60%. The bank cited oil supply disruptions and domestic capacity pressures as inflation risks, while noting slower output growth and easing consumer spending. RBA Gov. Michele Bullock said in August that this year’s rate increases had been tough for households with mortgages.
Finder reported that 30 of 40 experts in its Nov. 2 survey expected a hike; 22 said the RBA should raise rates. The survey records expert opinions.
Wee also pointed to the Reserve Bank of New Zealand’s Oct. 28 decision to hold its Official Cash Rate at 2.75% in a 4-3 vote as a possible precedent for a pause. He expects the RBA’s November forecasts to show lower 2027 GDP growth and higher inflation projections; those forecasts had not yet been published. The RBA is scheduled to release its decision and November Statement on Monetary Policy at 10:30 p.m. ET Monday, Nov. 2 (2:30 p.m. AEDT Tuesday, Nov. 3).
