CommBank Agrees: RBA Likely To Raise In August

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By Rudi Filapek-Vandyck

It is a fact that market volatility has sometimes affected the timing of the Reserve Bank’s rate decision, but economists Joseph Capurso and Michael Blythe at Commonwealth Bank would like to remind everyone that market volatility usually doesn’t deter the RBA to move on economic fundamentals. This should still make an interest rate hike by 25 basis points next week a near certainty.

Both economists note the bond market has decreased the odds of a further rate hike and both economists would agree the odds on a rate increase next week have lessened, but they still expect the Reserve Bank to deliver.

Complicating the case for another hike to 6.50% is the fact that Australia’s unemployment rate is likely to show an increase when the labour force survey for July is released.

CommBank believes that a spike to 4.9% of the workforce included in the new unemployment figures is not inconceivable. This would be a direct result of the Federal government having raised the work-seeking obligations of 233,000 people who are receiving the Parenting Payment and the Disability Support Pension.

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