Australia’s economic growth is anticipated to have accelerated at its fastest rate in three years during the last quarter. This period of growth coincides with increasing inflation, leading traders and some economists to speculate that the Reserve Bank of Australia (RBA)’s next move could be an interest rate increase. Official government data will be released on Wednesday.
Economists predict that gross domestic product (GDP) advanced by 0.7% in the three months leading up to September. This would represent the strongest reading since late 2022. Compared to the previous year, the economy is estimated to have grown by 2.2%, surpassing the potential rate, supported by the RBA’s easing policies earlier this year.
The combination of a strengthening economy, a tight labour market, and sustained price pressures has prompted money markets to price in a roughly 50% chance of an RBA rate hike late in 2026. Opinions among economists are divided. While the majority still anticipate another rate cut, some believe the central bank will remain on hold. Others align more closely with market expectations and foresee a potential rate increase.
