Elevated inflation running above the Reserve Bank of Australia’s 2-3% target, combined with materializing upside risks from the broadening Middle East conflict driving energy prices higher and AI-related demand boosting technology goods prices, anchored near-certain market-implied odds on a 25 basis point cash rate increase to 4.60% at the September 29 meeting. Stronger-than-expected domestic growth and inflation data since August reinforced the need for further tightening to return price pressures sustainably to target, with the unanimous board decision aligning with trader positioning built on these fundamentals. The RBA’s forward guidance, which keeps open the possibility of additional hikes, reflects ongoing uncertainties around productivity, housing market effects, and global energy shocks. The next policy meeting on November 3 could test this consensus if incoming CPI or labor data deviate sharply from recent trends.