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Standard Chartered strategist Nicholas Chia has revised his forecast, now predicting a 4.10% cash rate hike by the Reserve Bank of Australia (RBA) at the 17 March meeting, reversing a previous hold call. The bank also raised its terminal rate forecast to 4.35% by Q2 2024. This shift reflects stronger-than-expected inflation data and renewed concerns about wage growth and housing market resilience in Australia. The RBA’s hawkish pivot contrasts with the Reserve Bank of New Zealand’s recent pause, signaling divergent monetary policy paths in the Asia-Pacific region. The RBA’s potential rate hike could trigger volatility in the AUD/USD pair, with traders closely monitoring the central bank’s communication on inflation and labor market dynamics. A 4.10% rate would mark the highest level since 2013, potentially strengthening the Australian dollar against the US dollar and other majors. This move could also influence commodity prices, as Australia is a major exporter of iron ore and coal, which are sensitive to global demand and currency fluctuations. For forex traders, the RBA’s decision will be a key event in early March, with the market currently pricing in a 75% probability of a 25-basis-point hike. Investors should watch upcoming inflation data, wage growth reports, and RBA Governor Michele Bullock’s post-meeting statement for clues about the central bank’s future trajectory. The outcome will have broader implications for emerging market currencies and global capital flows.
