Hot CPI data pressures RBA toward back-to-back rate hike: Natixis

A pair of consecutive rate increases would widen the Australian dollar's yield advantage and keep short-term bond yields high, while any suggestion that November marks the final move could spark a reversal in both. Fuel serves as the main transmission channel, so oil prices stay crucial to the outlook: further crude gains would deepen the pass-through to services and amplify calls for additional tightening. Australian stocks, especially rate-sensitive sectors like property and consumer discretionary, face extra pressure if markets begin pricing a longer hiking cycle.

• ING raised its AUD/USD target to 0.71, backing a 25-basis-point RBA hike next week

For Australia’s inflation, fuel is no longer just a problem at the petrol station, and Natixis expects the RBA to act again next week.

• September CPI rose about 0.8% month-on-month and 4.3% year-on-year, above the consensus expectations of 0.7% and 4.2%.
• Energy added roughly 0.3 percentage points to the monthly gain, while travel contributed around 0.43 percentage points, the largest such share since December 2025.
• The energy shock is now passing through to the broader basket, in Garcia Herrero's view.
• The third-quarter trimmed mean edged up to about 3.7%, diverging from the RBA's August forecast of a peak in the second quarter.
• Comments from Hauser and Bullock reinforce the RBA's low tolerance for persistent inflation.
• Natixis expects a back-to-back hike on 3 November, with later decisions highly dependent on data.

September inflation in Australia was a sharp upside surprise that is likely to push the Reserve Bank of Australia into consecutive rate increases at its meeting on Tuesday, 3 November. That assessment comes from the Asia Pacific chief economist at Natixis, one of the most closely followed RBA analysts.

Headline consumer prices increased roughly 0.8% month-on-month in September and about 4.3% from a year earlier, both exceeding consensus forecasts of 0.7% and 4.2%. Garcia Herrero said the data surprised both the market and the central bank.

What troubles her most are the details. Energy contributed about a third of a percentage point to the monthly increase, but travel was the primary factor, adding roughly 0.43 percentage points, its largest contribution since December 2025. Because travel prices are closely tied to fuel costs, Garcia Herrero indicated that the data suggest the energy shock has begun to filter through to the broader basket of goods and services. She called this a warning sign for policymakers.

Underlying inflation is also moving away from the path the RBA expected. The trimmed mean, the central bank's preferred core measure, rose to about 3.7% year-on-year in the third quarter, edging up from the second quarter. In August, the RBA had projected that the trimmed mean would peak in Q2 and ease back toward 3.3% by the end of 2026. The latest figure widens the gap between that forecast and the actual inflation path.

Garcia Herrero linked the data to recent remarks from RBA officials. Deputy Governor Andrew Hauser recently described the inflation outlook as having deteriorated materially. Governor Michele Bullock told a parliamentary hearing this week that the central bank will not tolerate persistently high inflation. Against that backdrop, Garcia Herrero expects th RBA to favor another hike next week.

Beyond November, she sees policy becoming more finely balanced. The RBA is likely to maintain a hawkish tone while inflation remains high. However, signs of a softening labor market and slowing household spending under higher interest rates mean subsequent decisions are likely to be highly data-dependent.