RBA Analysis: Likelihood of Consecutive Interest Rate Hikes in March

After the Reserve Bank of Australia (RBA) took the historic step of raising interest rates in early February, new speculation has emerged about the possibility of consecutive monetary policy actions in March. Luci Ellis, Chief Economist at Westpac, outlined this scenario in her analysis on February 5, one day after the RBA became the first major monetary authority to hike rates this year.

The Strongest Signal from Senior Analysts Regarding Consecutive Actions

Ellis, who previously served as Assistant Governor of the RBA, did not entirely rule out the possibility of a series of rate hikes in March during her interview on Wednesday. She stated that, although the baseline projection remains focused on a rate increase in May following the release of first-quarter inflation data, evolving market conditions could alter the central bank’s decision calculus.

“If the flow of data between now and the March meeting shows stronger momentum, then the scenario of consecutive rate hikes could become a reality,” Ellis said. She emphasized that RBA policymakers have explicitly stated that their inflation trajectory projections are unacceptable and that they intend to reduce price pressures more quickly than initially expected.

From Market Expectations to New Considerations

Prior to this February announcement, most traders and economists anticipated that the RBA would take further action at the May meeting, not in March. The threshold for next month’s move was considered high based on prevailing market expectations at the time. However, signals from Westpac indicate that the scenario of consecutive hikes is already within the realm of possibility that cannot be ignored.

Inflation Pressure as a Potential Catalyst

The core of Ellis’s thinking is that, without data developments showing genuine inflation moderation, the RBA has room to maintain rates until the May meeting. However, if price dynamics continue to show unwanted momentum, the option of accelerating with consecutive rate hikes becomes an increasingly realistic consideration for Australian policymakers.