Rising energy prices heighten upside inflation risks; RBA expected to deliver fourth rate hike of the year next week.

Title context: Rising energy prices heighten upside inflation risks; RBA expected to deliver fourth rate hike of the year next week. Text: As rising energy prices further highlight upside inflation risks, economists say the Reserve Bank of Australia will raise its key interest rate next week and warn of a possible further hike in November. Money markets are currently pricing about a 90% probability that the RBA will raise the cash rate by 25 basis points to 4.6% next week. If the RBA hikes as expected, it will be the central bank's fourth increase this year. James McIntyre, an economist who previously believed the RBA would keep rates unchanged for the remainder of 2026, said in a research report: "Repeated hawkish signals indicate that the RBA's already limited patience is about to run out. A further escalation in energy prices could prompt businesses to pass on higher input costs to consumers." James McIntyre is not the only market participant to have recently changed their expectations for RBA rates. ANZ now expects the RBA to hike once more in September while maintaining its forecast for a November increase. UBS Group has adjusted its base case to consecutive hikes in September and November. Both institutions expect the key rate to rise to 4.85%, which would be the highest level since 2008. The Commonwealth Bank of Australia has brought forward its rate hike expectation from November to next week, citing Brent crude oil prices holding above $100 per barrel. The RBA was once one of the pioneers among developed economies in tightening monetary policy, raising rates at each of its first three policy meetings this year to curb resurgent inflationary pressures. In recent weeks, as energy prices have surged and the Middle East conflict shows little prospect of ending in the short term, the Federal Reserve, the Bank of Japan and the European Central Bank have all raised borrowing costs. The RBA's nine-member board will meet on September 28-29. RBA Governor Michele Bullock said on Friday that some of the upside inflation risks the bank had previously highlighted "appear to be materializing." She will participate in a fireside chat at 1 p.m. Sydney time, where she is expected to deliver hawkish signals. Australian fuel prices rise James McIntyre noted that Australia's per capita diesel consumption is among the highest in the world, and freight companies will pass on higher diesel prices to businesses through fuel surcharges. As geopolitical conflicts tighten global fuel supplies, diesel prices have already risen sharply this year. Separately, RBA Assistant Governor Sarah Hunter also outlined some of the issues facing the board in a podcast released earlier on Tuesday. Sarah Hunter said: "The Middle East conflict and its impact on oil prices if you've filled up your car recently, you may have noticed this." "The board has been very clear that although they haven't raised rates, they remain very concerned about inflation. We believe the inflation risks are clearly tilted to the upside."