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Deutsche Bank predicts RBA to hike in August

Joshua Peach

Following today’s monthly CPI data, Deutsche Bank chief economist Phil O’Donoghue is now predicting the Reserve Bank of Australia to hike rates at its next meeting.

“Underlying inflation is intolerably high in Australia. In fact, Australia is the only G10 country where underlying inflation has increased since December,” he said.

Despite the shift in view, O’Donoghue said the risk to his call was skewed to the RBA keeping the cash rate on hold in August, but also for an extended period after that.

“If the complete suite of price updates for Q2 looks a little more benign than the monthly indicator suggests, then there is still a chance that the RBA will hold fire.”