Australian economy grew 2.1% in final quarter, pressuring Reserve Bank for further rate hike
Australia's GDP expanded by 2.1% annually in the past financial year, exceeding forecasts and raising expectations of another interest rate increase.
Australia's economy grew a stronger-than-expected 2.1% over the past financial year, prompting analysts to say another Reserve Bank of Australia rate rise is all but assured. The Australian Bureau of Statistics reported on Wednesday that gross domestic product expanded by 0.4% in the June quarter, rising from 0.3% in March. This annual growth figure beat consensus forecasts and projections for 1.9%. Despite ongoing conflict in the Middle East affecting global trade, domestic demand remained robust enough to push output above targets. Higher-than-expected inflation data in July followed this strong economic performance, suggesting the economy is heating up further. The Reserve Bank currently struggles to close the gap between supply and demand within the Australian market. Money markets are now forecasting a 25% chance for a second rate hike by March 2027, with many investors assuming the hike will occur before Christmas. Treasury officials have indicated that monetary policy decisions will remain sensitive to this fresh momentum in growth.
