The Reserve Bank of Australia is widely seen by economists and financial markets as likely to raise its official cash rate at its first monetary policy meeting of the year in early February, supported by stronger-than-expected inflation and a resilient economy.

Recent data showing consumer price growth and underlying price pressures running above forecasts have intensified speculation that the central bank will move to tighten policy to ensure inflation returns sustainably to target.

Australia’s Consumer Price Index for the December quarter surprised on the upside, with headline inflation climbing further and the trimmed mean measure that the RBA watches closely remaining elevated.

Price pressures were particularly notable in housing and utility costs, contributing to inflation running above the bank’s two to three per cent target range.

These inflation outcomes have prompted major financial institutions, including ANZ and Commonwealth Bank economists, to revise forecasts and anticipate a quarter-point increase in the official cash rate at the bank’s meeting scheduled for early February.

Market expectations have shifted significantly in recent weeks, with implied probability measures for an interest rate hike rising markedly following the latest inflation release.

The strength of the labour market, demonstrated by low unemployment and solid employment growth, has further supported calls for policy action, reinforcing the notion that the broader economy may be running near capacity.

Despite these signs, some economists maintain that temporary factors may be influencing recent price spikes, urging caution and suggesting that a decision to hold could also be justified.

Nonetheless, the prevailing view in markets and among a broad range of forecasters is that the RBA is positioned to raise the cash rate by twenty-five basis points, lifting borrowing costs and signaling a calibrated response to persistent inflationary pressures.

The outcome of the February meeting will be closely watched for its implications on mortgage costs, business investment and the broader economic trajectory in Australia.

The current official cash rate remains at three point six per cent, a level maintained by the RBA in its final policy meeting of the previous year, with the February decision now poised to potentially mark the first rate increase in more than a year amid evolving economic conditions.