The oil shock from the Middle East has pushed every major central bank into wait-and-see mode, except one. Australia is set to lift its cash rate to 4.35% on Tuesday, while the Fed, the European Central Bank, the Bank of Japan, and the Bank of England all sit on their hands.
It would be the third straight hike from the Reserve Bank of Australia this year. And it would be the first time since 2021 that the world's biggest central banks have all met in the same week without one of them moving.
Australia walked into this oil shock with a price problem already on its plate. Trimmed mean inflation - the gauge that strips out the biggest price swings to show the trend - hit 3.5% in the first quarter, a full point above the RBA's 2.5% target.
HSBC chief economist Paul Bloxham said the economy has been running hotter than its safe speed. His read: a tight jobs market plus fast growth means high prices could get baked in if the RBA does not act.
The oil shock from the Middle East is set to push prices higher in the second quarter, on top of an already-hot start. That mix is what sets Australia apart from peers like the U.S. or Japan, where prices were closer to target before oil spiked.
For Australian shoppers, the squeeze is real. Higher rates mean bigger home loan bills, and the country has one of the highest shares of households on floating-rate loans in the world.
Finder polled 36 economists for its RBA Cash Rate Survey, and three out of four expect the RBA to move 25 basis points on Tuesday. Of the 27 who weighed in on what comes after that, just over half think the next hike lands by August.
A few are betting on a hold. James Morley from the University of Sydney said the close call could tip toward a pause, given the mixed pull of an oil supply shock on one side and slower demand on the other.
That is the minority view, though. Bloxham himself expects the RBA to deliver the hike with what he called "a generally hawkish tone" and limited forward guidance.
Bloxham flagged a sharp drop in business and shopper confidence, which he reads as a downturn already getting underway. His base case is that the RBA hikes Tuesday and then sits still through year-end.
The bigger question is what happens at the August meeting. Half the economists in Finder's survey think the RBA will go again, while the other half think Tuesday's move will be the last for a while.
For Australian borrowers, the pain is already real. Richard Whitten of Finder said another rate rise would take the cash rate back to its 2024 peak, but with prices higher than they were two years ago, households are showing up to this peak in a worse spot.
A 25 basis point hike puts the cash rate at 4.35%, matching the 2024 peak.