Whether you're buying ASX shares or paying off a mortgage, next Tuesday's Reserve Bank of Australia (RBA) interest rate meeting will be one to watch.
As you're likely aware, the RBA has already boosted the official cash rate twice in 2026 in an effort to rein in resurgent inflation.
This sees interest rates back at 4.10% today. That's just one modest hike away from the 4.35% highs ASX investors endured through most of 2024 after inflation surged in Australia's post-pandemic, stimulus-fuelled economy.
Inflation was already ticking higher before the commencement of the Iran war at the end of February, which sent global energy prices through the roof.
Indeed, as the Australian Bureau of Statistics (ABS) reported yesterday, automotive fuel prices surged by a blistering 32.8% in March.
And while headline inflation of 4.6% for the 12 months to March was below consensus economist forecasts of 4.8%, it's still the highest level since September 2023.
This has seen a marked shift in investor expectations, with market expectations now at 76% for a 0.25% interest rate increase next week, according to the ASX's RBA Rate Indicator.
But what are the experts saying?
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Experts weigh in on Australia's interest rate outlook
Josh Gilbert, lead analyst APAC at eToro, said that Wednesday's inflation print was "unlikely to move the needle for the RBA, with a third hike next week still the base scenario".
As for underlying inflation, which is the RBA's preferred gauge when it comes to interest rate decisions, Gilbert noted:
Quarterly trimmed mean inflation, which strips out the most volatile price movements like the current fuel surge, rose 3.5% annually, and it remains stubbornly above the top of the RBA's 2-3% target band. This shows that the inflation problem remains a concern in its own right, well before the fuel crisis added to the mix, which is something the RBA can't ignore.
Anthony Malouf, economist at Ebury, also expects ASX investors will have to deal with another interest rate hike next Tuesday.
"Despite the softer-than-expected headline print, we maintain our call for the RBA to raise rates 25bps to 4.35% at next week's meeting," he said.
Malouf added:
The necessity for a hike next week is clearly underpinned by the interplay between elevated inflation and a persistently resilient labour market. With trimmed mean holding at 3.3% and domestic price pressures remaining elevated, we believe the RBA has little choice but to act.
However, CreditorWatch chief economist Ivan Colhoun believes the market is overestimating the odds that the RBA will hike interest rates next week.
According to Colhoun:
The market remains substantially priced for a move next week, though I assess there to be a lesser risk than priced given the substantial impacts on confidence and auction clearance rates and the unknown duration of the Strait of Hormuz closure.
Mark Wang, CEO at Colter Bay, also thinks ASX investors and mortgage holders may see the RBA hold tight next week.
Commenting on yesterday's 4.6% inflation print, Wang said:
The immediate reaction is to assume this locks in another RBA hike, but that's not a given. Australia is heavily exposed to housing, and higher rates flow straight into mortgage repayments rather than productive investment, which changes how the tightening cycle feeds through the economy.
