The bank cites Australia’s 4.75% minimum wage hike and persistent inflation risks as drivers for a fourth rate rise.
Citi has reaffirmed its forecast for a 25 basis point Reserve Bank of Australia rate hike in August, lifting the cash rate to 4.60%. The call follows Australia’s 4.75% minimum wage increase, which the bank said adds to existing cost pressures and reinforces upside inflation risks into the second half of the year.
Prior to this, Citi had already projected a fourth rate hike, citing elevated business costs linked to geopolitical tensions, including the Middle East conflict. Market consensus had been divided, with some analysts expecting the RBA to hold rates steady amid cooling inflation data.
The wage decision is expected to further strain business margins, potentially accelerating price growth in services sectors.