RBA: Higher rates risk with inflation pressures – TD Securities
Source Fxstreet
TD Securities analysts highlight a hawkish shift from the Reserve Bank of Australia (RBA) after Deputy Governor Hauser signaled limited confidence that current policy is sufficient to return inflation to target. They now forecast a 25 bps rate hike at the next meeting and warn the cash rate may need to rise above 4.35% if Oil-driven inflation persists.
RBA signals scope for further tightening
"The RBA Deputy Governor indicated that the RBA Board does not have "high confidence" that the cash rate is at a level consistent with bringing inflation back to the 2-3% inflation target in comments at a Fireside chat in New York."
"Further, Deputy Governor Hauser stated inflation in the economy is “too high” and said policymakers were grappling with the implications of the income shock from surging oil prices due to the Middle East conflict."
"“Rates will have to go to a level where they bring inflation back to target. And if that means them going higher, it means them going higher"."
"RBA staff last month estimated the direct effect via petrol prices of oil remaining around $100 a barrel would be to lift headline inflation to around 5% y/y in Q2, well above target band."
"We forecast another 25bps hike at next month's meeting and see the risk the RBA may need to take the cash rate above 4.35% after May."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Disclaimer: For information purposes only. Past performance is not indicative of future results.
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The downturn occurred despite the reopening of the U.S. government on Thursday, which many had hoped would provide essential support for crypto markets. This year initially appeared promising for cryptocurrencies, particularly after the inauguration of President Donald Trump, who has established the most pro-crypto administration thus far. However, ongoing political tensions—including Trump's tariff strategies and the recent government shutdown, lasting a historic 43 days—have contributed to several rapid price pullbacks for Bitcoin throughout the year.
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Notably, Bitcoin is not alone in its struggles, as Ethereum and Solana have also recorded declines of 7.95% and 28.3%, respectively, since the start of the year, while numerous altcoins have faced even steeper losses.
Looking ahead, questions linger regarding the viability of the four-year cycle thesis, particularly given the increasing institutional support and regulatory frameworks now in place in the crypto landscape. Matt Hougan, chief investment officer at Bitwise, remains optimistic, suggesting a potential Bitcoin resurgence in 2026 driven by the “debasement trade” thesis and a broader trend toward increased adoption of stablecoins, tokenization, and decentralized finance. Hougan emphasized the soundness of the underlying fundamentals, pointing to a positive outlook for the sector in the longer term.
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