Recent wages data from the December quarter has done little to ease the Reserve Bank of Australia’s (RBA) concerns about taming inflation, according to VanEck’s head of investments and capital markets, Russel Chesler. He noted that with December inflation at 3.8 per cent and services inflation proving persistent, the RBA’s worries remain substantial. The recent increase in the cash rate to 3.85 per cent is expected to take some time to fully impact the economy. VanEck is an investment management firm managing a diverse range of exchange-traded funds (ETFs), mutual funds, and other investment solutions. The company aims to provide investors with opportunities to access a variety of markets and asset classes.
Chesler highlighted that despite unemployment remaining historically low at 4.1 per cent and wage growth remaining steady, one rate hike might not suffice to return inflation sustainably to the 2 per cent to 3 per cent target band. Currently, the market is pricing in one further rate increase in August 2026.
Chesler suggests the RBA may need to act sooner, and a third rate hike later in the year cannot be ruled out if inflation momentum continues. He added that businesses with pricing power and inflation-linked revenues are better positioned in an environment characterised by higher inflation and elevated interest rates.
