Aussies hoping that interest rates had peaked have received some unwelcome news this morning.
The latest economic growth figures came in stronger than expected, increasing the pressure on the RBA ahead of its September meeting.
The Australian Bureau of Statistics (ABS) reported that GDP rose 0.4% in the June quarter and 2.1% over the year.
Economists had expected quarterly growth of 0.3% and annual growth of 1.8%, while the RBA had forecast annual growth of 1.9%.
According to The Australian, there's a 60% chance of a 25-basis-point rate hike this month. That's up from 52% before the GDP figures were released today.
So, could borrowers be facing another rate hike this month?
Let's dive right in.
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GDP comes in ahead of forecasts
While the economy is growing at a steady pace, today's numbers were above the RBA's forecasts.
Household consumption increased 0.4% during the quarter and contributed 0.2 points to GDP growth. Discretionary spending rose 1.4%, although the ABS said almost half of that increase came from vehicle purchases.
Private investment was flat, while GDP per capita was unchanged during the quarter and rose 0.7% over the year.
Productivity was also weak, with GDP per hour worked flat in the June quarter and down 0.2% over the year.
And that gives the RBA another reason to keep a rate hike on the table, particularly with trimmed mean inflation still running at 3.6%.
Rate hike bets are climbing
The RBA left the cash rate unchanged at 4.35% in August after raising rates 3 times earlier in 2026.
At the time, it said inflation remained too high and warned there was still a risk it could stay elevated for longer.
It seems that the GDP result has given markets another reason to think the August pause may not last long.
Capital Economics head of APAC, Marcel Thieliant, told The Australian that "the bank will probably hike rates again before long, perhaps as soon as this month".
The bond market also reacted, with Australia's 3-year government bond yield rising to around 4.82% as traders increased their bets on another rate hike.
What happens next?
The next RBA decision is due on 29 September, which means there is still more data to come before the board meets again.
By then, the RBA should have a read on whether inflation and demand are easing enough to keep rates unchanged.
Nonetheless, all eyes will now be on what the RBA does at the end of the month.
