RBA Set to Hike to 4.60% as US Payrolls Slow to 98K
Fazen Markets Editorial Desk
Collective editorial team · methodology
The Reserve Bank of Australia is expected to raise its cash rate by 25 basis points to 4.60% at its policy meeting on Tuesday, 29 September 2026, extending a tightening cycle built on sticky underlying inflation and a labor market that keeps absorbing workers. The same week brings the first read on Australia's August CPI, a US payrolls print forecast at 98K against 162K prior, and eurozone inflation seen rising to 3.7% year on year. Several FOMC members are scheduled to speak across the five sessions.
Context — why the RBA hike matters now
The RBA's case rests on inflation that is not converging fast enough to its own forecasts. The trimmed mean is expected to hold at 3.6% in August, above the central bank's year-end projection of 3.3%. That gap is the entire argument for another hike rather than a pause.
Governor Bullock has previously said inflation risks are "materializing," a phrase that keeps further moves on the table beyond September. Any additional tightening stays data-dependent, which makes the following day's CPI release unusually load-bearing for the Australian curve.
Higher fuel and food costs are feeding the pressure, given Australia's reliance on imported oil products. The July reading already beat expectations, with consumer prices rising 1.0% against a Westpac forecast of 0.8% and market consensus of 0.9%. Annual inflation eased to 3.5% from 3.8% that month.
Labor supply is the second pillar. Unemployment has risen to 4.6%, yet full-time employment keeps growing and the participation rate has reached a record 67.1%. Strong hiring signals that demand for workers has not broken.
Taken together, the RBA is expected to frame inflation risks as tilted to the upside, sustaining a restrictive stance that could lend the Australian dollar some support.
Data — what the numbers show
The Australian CPI consensus for August puts the monthly print at 0.5%, down from 1.0% prior, with trimmed mean CPI m/m at 0.3% against 0.5% previously. Headline CPI y/y is forecast to climb to 4.1% from 3.5%. Westpac models August CPI at 0.4% m/m, with its detailed estimate at 0.43%, and attributes 0.2 percentage points to food and non-alcoholic beverages.
| Release | Forecast | Prior |
|---|---|---|
| Australia CPI m/m | 0.5% | 1.0% |
| Australia CPI y/y | 4.1% | 3.5% |
| Australia trimmed mean m/m | 0.3% | 0.5% |
| Canada GDP m/m | 0.1% | 0.3% |
| US core PCE m/m | 0.3% | 0.2% |
| Eurozone CPI y/y | 3.7% | 3.2% |
| US nonfarm payrolls | 98K | 162K |
Canada's GDP is expected at 0.1% m/m versus 0.3% prior. Growth lost momentum in July, with preliminary data pointing to little or no change after a strong second quarter. Manufacturing, wholesale and retail activity weakened, though stable energy output and a housing rebound offered partial support.
In the US, core PCE m/m is seen at 0.3% from 0.2%, personal income at 0.5% from 0.4%, and personal spending at 1.0% from 0.2%. Eurozone core CPI flash y/y is forecast at 2.5% from 2.4%.
Analysis — what it means for markets and sectors
The eurozone question is whether higher energy costs begin pushing services inflation higher. If services follow energy, the ECB's path tightens; Wells Fargo expects one final 25 bps hike lifting the deposit rate to 2.75%, with September PMIs pointing to Q3 growth near 0.4%. Banks and rate-sensitive utilities sit on opposite sides of that trade.
The US PCE report arrives alongside the third estimate of Q2 GDP and annual revisions spanning roughly five years. Those revisions could reshape the recent picture of income, spending, savings and inflation. Methodological changes are expected to point to a softer near-term inflation trend even as August firms, which is the counter-argument to any hawkish read.
Wells Fargo analysts expect the data to keep showing a resilient US economy, with consumer spending and technology investment as key drivers. That view argues against pricing aggressive Fed cuts, and it caps the downside for front-end yields.
Labor is the swing factor. Payroll growth is forecast to slow to 90K at Wells Fargo and 98K on consensus, following a stronger-than-expected August. Local government education jobs could stay volatile after sharp swings in recent months. Average hourly earnings are seen at 0.3% m/m and 3.2% y/y, contained enough not to pressure inflation.
Positioning follows that split. Dollar longs lean on resilient US data, while the euro faces a data-dependent ECB and Aussie longs are already positioned for a hawkish RBA.
Outlook — what to watch next
Tuesday's RBA decision and Canada GDP set the tone, followed by US CB consumer confidence and JOLTS job openings the same session. Wednesday delivers Australian inflation, ADP non-farm employment change, core PCE m/m and final GDP q/q. Thursday brings US unemployment claims and ISM manufacturing PMI.
Friday is the heaviest slate: Tokyo core CPI y/y, eurozone inflation figures, and US average hourly earnings m/m, non-farm employment change and unemployment rate. The unemployment rate is expected to hold at 4.1%, with labor force participation showing early signs of stabilization.
Watch the trimmed mean print against the RBA's 3.3% year-end forecast, and the payrolls figure against the 162K prior. FOMC speakers across the week can move the front end between data releases.
Frequently Asked Questions
What does an RBA hike to 4.60% mean for the Australian dollar?
A hike paired with hawkish language typically supports the currency by widening the rate differential. The report notes that a restrictive stance could provide some support for the AUD. The risk is a hawkish hike followed by a soft CPI print the next day, which would reverse that support quickly. Traders will weigh the statement against Wednesday's trimmed mean figure.
Why are US nonfarm payrolls expected to slow to 98K?
Wells Fargo analysts expect payroll growth to slow to 90K in September after August's stronger-than-expected reading, with consensus at 98K versus 162K prior. Local government education jobs could remain volatile after sharp swings. The labor market still appears relatively balanced, supported by low jobless claims, improving job postings and hiring measures above last year's levels.
What happens if eurozone inflation rises to 3.7%?
The key focus is whether higher energy costs start pushing services inflation higher. Core CPI flash y/y is expected at 2.5% versus 2.4% prior. Wells Fargo expects one final 25 bps ECB hike taking the deposit rate to 2.75%, though the path remains data-dependent. A services-driven upside surprise would strengthen the case for that final move.
Bottom Line
The RBA is set to hike to 4.60% while slowing US payrolls and rising eurozone inflation keep every major central bank data-dependent.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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