Market pricing for a Reserve Bank of Australia rate hike next Tuesday has risen from 72% at the start of the month to 88% as inflation stays high and the Middle East conflict keeps oil and fuel prices elevated. Some economists say the RBA could raise rates again in September and November, potentially delivering back-to-back moves to curb persistent inflation. They also say the central bank could even consider a larger one-off increase of 40 or 50 basis points.

Australia’s unemployment rate rose unexpectedly to 4.6% in August, above forecasts of 4.5%. Full-time employment fell by 6,000, while the participation rate increased to 67.1%. The figures were released ahead of the Reserve Bank of Australia’s interest-rate decision next week. RBA Governor Michele Bullock has said unemployment would need to rise into a 4.5% to 5% range to help ease inflation pressure.

Middle East conflict has tightened global oil trade, driving up oil prices and lifting petrol and diesel costs in Australia, with unleaded petrol reaching $2.30 a litre in some areas and diesel nearing $3 a litre. The Reserve Bank of Australia has raised rates three times in 2026, taking the cash rate from 3.60 per cent at the start of the year to 4.35 per cent, and the four big banks expect it to rise again to 4.60 per cent by year-end. Higher fuel prices and interest rates are increasing mortgage and living costs for households, while consumer spending has not shown a clear pullback and inflation has been slow to ease.

Iran-backed Houthi forces in Yemen took control of the strategic Red Sea town of Mocha on Thursday, which sits near the Bab al-Mandeb strait linking Asia and Europe via the Suez Canal and handles the transport of millions of barrels of oil each day. The development has heightened global concerns about shipping security. It could also further expand Iran’s influence over a key international waterway.

Australia’s headline inflation eased slightly to 3.5% in July, but it remains well above the Reserve Bank of Australia’s 2–3% target band. Core inflation, measured by the trimmed mean, held at 3.6% and was also higher than forecasts. RBA officials have reiterated the need to return inflation to the target range, lifting market expectations of a fourth rate rise later this month. If the cash rate is lifted again, it could reach a 15-year high.

A failure in National Air Traffic Services’ flight processing system on Sept. 8 led to at least 625 flight cancellations across the UK, with London Heathrow most affected. More than 65,000 passengers were delayed by up to eight hours. NATS said at 7.30pm on Sept. 8 the problem had been fixed, but widespread cancellations and diversions had already left tens of thousands stranded.

An RBA assistant governor said the central bank’s concerns about inflation are intensifying and signalled it could lift rates again this year if price growth remains outside its 2%–3% target range. The cash rate is currently 4.35%. Although July inflation eased to 3.5%, it was still above expectations. Markets are now pricing the first rate cut as late as August 2027.

Australia will end its fuel excise cut from Sunday, lifting the tax on petrol by 16 cents per litre. The move is expected to add about A$9 to a 50-litre fill or roughly A$11 to a 65-litre tank. The temporary tax break had been extended by a month after it was due to end on July 1, amid volatile global oil prices linked to the continuing Middle East war.

Australia’s Commonwealth Bank will automatically move 1.5 million low-income customers into fee-free accounts following a regulatory ruling. The bank will also remediate A$270 million in fees it improperly charged over the past five years. CBA has agreed to pay around A$68 million in goodwill compensation.