Oil prices see money markets bet on two more RBA hikes for 2026; NAB see CPI @ 5%

Despite earlier this week claiming that Australian CPI could hit 5% by the middle of the year, National Australia Bank’s (ASX:NAB) chief economist Sally Auld has now suggested a March hike from the RBA could be “too soon.”

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While this HotCopper finance journalist tries to figure out how the hell those two statements fit together, the money market has shrugged it off and just gone ahead and baked in expectations for two hikes to come this year from the RBA.

In fact – inflation expectations in ANZ-Roy Morgan’s latest weekly survey jumped as much as 0.8% – the largest rise since 2010, and a 14-year high. In that world, it seems somehow calming that we’re only expecting two RBA hikes (though sentiment is fickle and largely reactive at the moment).

Sally Auld’s Tuesday statements didn’t seem to last more than twenty-four hours: NAB is on Wednesday tipping a hike; so too is Westpac (whose analysts warned on Energy re: Oz CPI in a note last week published via Morningstar.)

America’s investment banks are piling on: Citi, BofA, UBS and even Deutsche Bank see an RBA hike this month, when the board meets in WK12. That’s a lot of pressure on the Reserve Bank, whether it admits that or not.

But it remains true also that for all intents and purposes, stronger conviction around two rate hikes is just a reiteration of what many were already expecting from the Australian central bank this year. It’s just now, with higher oil prices thanks to the Iran war, it feels more definite.

(Analysts who just two weeks ago suggested the RBA might be done hiking for the rest of the year have, unsurprisingly, gone quiet.)

Both Bullock and, more recently, RBA Deputy Governor Hauser have highlighted the oil price as being an upside risk to Oz CPI, which is already struggling thanks to a +30% jump in electricity prices over the last twelve months – leaving it a pretty good unanswered question as to why the RBA cut at all.

Now there’s even more pain to come – and with Asian markets quickly battening up the hatches when it comes to the free flow of domestic oil supplies, that situation being so close to home is a stark reminder that Australia’s hardly insulated from energy shocks borne from the (latest) Iran war.

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