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Westpac economists predict the Reserve Bank of Australia (RBA) will raise interest rates by 25 basis points in March 2024, followed by a second hike in May. This forecast aligns with the RBA's ongoing efforts to combat inflation, which remains above the 2-3% target range. The central bank has maintained a hawkish stance since 2022, with current rates at 4.35%. The March hike would mark the first rate increase in over a year, signaling renewed focus on price stability. For global markets, the RBA's tightening cycle could strengthen the Australian dollar (AUD), impacting commodity exporters reliant on the currency. Higher rates may also influence gold prices, as Australia is a major producer. Traders should monitor AUD/USD and Gold for volatility. The decision could ripple through emerging markets, affecting capital flows and investor risk appetite. MENA investors should watch for spillover effects on Gulf equity markets, particularly sectors tied to commodities. The RBA's statements on inflation and growth projections will be critical. Key indicators to track include Australia's Q4 GDP and inflation data in the coming months.
