RBA Rate Hike Odds Hit 80% Ahead of Sept. 29 Decision

For rates traders and Australian credit investors, the gap between an 80% market-implied probability and the RBA's stated preference for quarterly inflation data is the central tension. Sarah Hunter's Monday fireside chat and Michele Bullock's Friday parliamentary appearance will test whether the internal consensus has shifted toward urgency, or whether the board is content to wait for November's read on the full September-quarter CPI.

Senior Reserve Bank of Australia officials are entering a pivotal communications week, with chief economist Sarah Hunter and governor Michele Bullock both scheduled to make public appearances before the bank's September 29 cash rate decision. Markets have already moved sharply on the central bank's recent hawkish tone, assigning roughly an 80 per cent probability to a 25 basis point increase. The next several days could cement or unwind those expectations, making this one of the more consequential pre-decision periods for Australian financial markets in 2026.

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Equities rallied in line with that pricing: the S&P 500 climbed 0.86 per cent to 7,656.98 points, the Nasdaq Composite gained 0.96 per cent to 26,333.04 points, and the Dow Jones Industrial Average rose 0.98 per cent to 52,573.29 points.

The RBA has raised the cash rate three times so far in 2026, and the messaging from its leadership has been unambiguously focused on inflation remaining too high. Last week, Dr Hunter and deputy governor Andrew Hauser sent the bond market into a spin during separate speaking appearances. The market reaction was strong enough that Westpac, the last of the big four Australian banks to retain a no-more-hikes forecast, abandoned that call following Hauser's appearance on the ABC's 730 program. Yet Westpac chief economist Luci Ellis still believes the board will prefer to wait until its November meeting rather than move in September.

The split between market pricing and at least one influential bank economist is the most important analytical issue in this cluster. The key distinction is the difference between monthly and quarterly inflation data. July's monthly consumer price index surprised strongly to the upside, reinforcing the case for further tightening and contributing to expectations that the US Federal Reserve may also raise rates. However, the RBA has repeatedly said it prefers to react to less volatile quarterly inflation prints rather than noisy monthly releases. Dr Ellis made this point explicit, noting that overreacting to a noisy monthly print is something the board has previously said it would not do.

Her full assessment is nuanced. She acknowledged that if internal board members feel the situation is more urgent, they could muster a majority of Monetary Policy Board votes in favour of a September hike. That scenario leaves traders in an uncertain position: the market is pricing an 80 per cent probability of a September move, while one of the last holdouts among major bank economists sees the November meeting as the more natural window. This is not a trivial divergence. If the RBA ultimately holds in September and instead signals November, Australian rate futures and bond yields would be positioned for a sharp repricing. Conversely, if Hunter or Bullock use this week's platforms to lean further into the hawkish language, the market's 80 per cent pricing could move even higher and bring forward expectations.

The timing of Hunter's and Bullock's appearances heightens their significance. Hunter's fireside chat at a Regional Australia Institute summit in Canberra is scheduled for Monday, September 14, and Bullock's parliamentary committee appearance is set for Friday, September 18. These engagements come well after the July monthly inflation surprise and before the RBA's board meeting on September 29. They represent the final high-profile public opportunities for the central bank to either validate the market's hawkish repricing or walk it back. Market participants will scrutinise every phrase around inflation persistence, wage growth, and household spending.