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ASX to drop as RBA tipped to hike rates today

ASX and RBA head Philip Lowe
ASX to fall as RBA boss Philip Lowe makes his decision on the official cash rate. (Source: Getty)

ASX: The local market is poised to fall again after the market closed lower yesterday.

This comes amid speculation that the Reserve Bank of Australia could raise the cash rate today for the first time in 12 years, after inflation surged to a 20-year high of 5.1 per cent.

Wall Street: US stock markets see-sawed throughout yesterday’s session to close higher as investors sought to pick up technology names that had been beaten down in recent days ahead of this week's Federal Reserve meeting.

The gathering of US central bank policymakers is widely expected to see interest rates rise by half a percentage point, with this week's move expected to kick off a period of aggressive rate hikes to counter inflation.

Interest rates: Economists are generally convinced the Reserve Bank of Australia will lift the cash rate at today's monthly board meeting, which would be the first increase in more than a decade.

There has been a marked turnaround in thinking on the interest rate outlook in the past week after inflation figures proved much stronger than expected.

Prime Minister Scott Morrison has rejected suggestions an interest rate hike could hurt him on polling day, saying Australians understand the impact of global inflationary pressures.

Farming boom: Australian farmland prices have seen their highest growth in 27 years with land values increasing by 20 per cent in the past year, according to a Rural Bank report.

Victorian Budget: Victoria may not be able to keep its debt and deficit in check if interest rates spike and migration doesn't return to pre-COVID levels, a leading economist has warned.

Victorian Treasurer Tim Pallas, who will hand down his eighth state budget, has repeatedly argued Treasury can keep net debt in check by growing the economy through investing while interest rates remain low.

But if rates rise quicker and higher than forecast, economist Saul Eslake said sticking to that plan could backfire.

Antitrust: Apple faces a possible hefty fine and may have to open its mobile payment system to competitors after EU antitrust regulators charged the iPhone maker with restricting rivals' access to its technology used for mobile wallets.

-With AAP

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