With the chance of a hike currently viewed as 50-50, the latest inflation report card could prove decisive ahead of the Reserve Bank\u2019s next meeting. <\/p>\n
Rates could \u2018go either way\u2019<\/p>\n
Economists widely expect headline inflation to ease to 3.3 per cent, driven largely by lower electricity prices.<\/p>\n
But Fort Lake Asset Management founder Christian Baylis said Australia remained \u201cright at the crossroads\u201d, with even a small departure from the forecast capable of changing the conversation entirely. <\/p>\n
\u201cThe numbers to look out for there: if we get 3.6, we\u2019ll get the alarm bells ringing for potential hikes, potentially even in September,\u201d he told Sunrise on Tuesday.<\/p>\n
\u201cIf we get three, I think the conversation will start to turn, talking about cuts.\u201d<\/p>\n
\u201cWe\u2019re right at the crossroads at the moment. It\u2019s currently priced for a 50-50 hike, but it\u2019s sensitive. We\u2019re right on the precipice here, it could go either way.\u201d<\/p>\n
![\"Fort](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/08\/55a859f984a483c3d0f391a4d83da88392bbf94c.png\")
Fort Lake Asset Management founder Christian Baylis says crucial inflation data could send rates either way. Credit: AAP, SunriseWhy everything feels so expensive<\/p>\n
While the RBA has traditionally aimed to keep inflation between 2 and 3 per cent, Baylis said its updated remit placed greater emphasis on the 2.5 per cent midpoint.<\/p>\n
He warned returning inflation to the target range would not undo years of price increases already absorbed by households. <\/p>\n
\u201cWhat people have to realise, it\u2019s not just getting back to the inflation level; you have to address the past years of excess inflation,\u201d he said.<\/p>\n
\u201cThat\u2019s why everything feels so expensive, because we\u2019ve had years and years of excess inflation above that 2.5 per cent level.<\/p>\n
\u201cAnd we have to address the sins of the past, and we have to address the inflation of the future.\u201d<\/p>\n
He also argued government policy was limiting productivity and making the RBA\u2019s task more difficult. <\/p>\n
\u201cGovernment has to get out of the road; they have to reduce red tape; they have to allow businesses to be more productive if they want to make the RBA\u2019s job easier,\u201d he said.<\/p>\n
The next crucial clue<\/p>\n
Notes from the Reserve Bank\u2019s last board meeting will also be released, offering a clearer indication of how close members came to considering another increase. <\/p>\n
Together, the inflation figures and meeting minutes could determine whether borrowers need to brace for higher repayments or can begin looking towards eventual relief. <\/p>\n
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