RBA Nov rate hike bets surge to over 50% after Hauser warning on inflation

Markets have raised the probability of a Reserve Bank of Australia rate hike at its November meeting above 50%, following remarks from Deputy Governor Michelle Hauser warning that inflation risks remain elevated. The repricing reflects a shift in expected policy path, with overnight index swap pricing moving to incorporate a tightening bias that had previously been seen as unlikely. The transmission runs primarily through the rate differential channel: a higher expected cash rate lifts Australian short-end yields relative to peers, which tends to support the Australian dollar and tighten financial conditions for rate-sensitive domestic sectors such as housing credit and construction. Australian government bond yields, particularly the front end of the curve, and the AUD are most directly exposed, while rate-sensitive equities including banks, property trusts and consumer discretionary names face valuation pressure from the higher discount rate. The next concrete catalyst is the Australian monthly CPI indicator, whose trimmed-mean and services components will determine whether the inflation signal Hauser flagged is confirming or fading ahead of the November decision.

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