RBA rate hike widely expected, Deutsche Bank alone predicts hold

The Reserve Bank of Australia's meeting on Tuesday is widely expected to deliver a rate hike, but Deutsche Bank is tipping it will hold.

Earlier:

• Deutsche Bank stands alone with RBA hold call as 31 of 32 economists tip a hike
• JPMorgan joins hike call for RBA’s November meeting, sees tightening bias persisting
• RBA set for fifth 2026 hike to 4.85% as banks flag risk of another move in February
• ING lifts AUD/USD target to 0.71 as it backs a 25bp RBA hike next week
• RBA set for back-to-back hike after hot CPI, says Natixis’ Garcia Herrero

Australia's central bank will reveal its latest policy decision at 2:30pm local time on Tuesday (0330 GMT, 2230 US Eastern on Monday), with a fifth rate increase this year widely anticipated by markets and economists.

A Reuters poll of 32 economists found 31 predicting a quarter-point increase, lifting the cash rate from 4.60% to 4.85% – a level not seen in close to 20 years. Australia's four largest banks and JPMorgan are among the forecasters; JPMorgan says senior RBA officials have indicated that inflation remains above target. Markets imply roughly an 85% probability of a move following September-quarter inflation of 3.7%, well above the bank's goal.

Deutsche Bank is the only major forecaster calling for a hold. Its Australia chief economist Phil O'Donoghue argues inflation is in line with the RBA's own projections, unemployment has climbed to 4.7%, and the cumulative 100 basis points of rate increases is taking effect. In his view, the board can hold off until December, when it will have Q4 inflation figures and a better picture of oil prices after the US midterms. Deutsche expects Brent crude to fall to $90 a barrel by early next year. O'Donoghue has advised the board to form its own view rather than follow the market's "echo chamber", citing the Reserve Bank of New Zealand's surprise hold last week.

The November meeting will include updated quarterly forecasts along with the decision, so the RBA will release a fresh Statement on Monetary Policy and new projections for inflation, growth, and unemployment. Governor Michele Bullock will hold a press conference at 3:30pm Sydney time. Given that a rate increase is heavily priced in, an unchanged rate would be a larger shock for the Australian dollar and short-term bonds. If the board does raise rates, the key question will be its guidance on whether additional tightening lies ahead.