If you go by the big banks’ consensus about the RBA’s next move, mortgage holders will be the big losers on Melbourne Cup day

The Reserve Bank of Australia gathering on Tuesday follows the recent release of a firmer set of inflation data, which fanned the case for a 13th interest rate hike since May 2022.

Economists at all of the big four banks are tipping a 25 basis point increase, which will lift the key cash interest rate to 4.35 per cent.

Commonwealth Bank economists put the likelihood of a November hike at 80 per cent, against a 20 per cent chance that the cash rate will stay on hold.

The 400 basis points of tightening has already put pressure on mortgage holders and a further increase will add more than $80 to the monthly cost of paying off the average home loan.

The RBA has left the cash rate on hold for the past four months while repeatedly warning it might need to keep jacking up interest rates if still-high inflation does not fall fast enough.

Governor Michele Bullock last month made it clear the board’s tolerance for a slower return to the bank’s preferred two to three per cent target band – against its 2025 forecast – is low.

Her warning was followed by a hotter set of inflation numbers that cast doubt over the expected timeline.

Headline inflation rose 5.4 per cent annually in the September quarter – well below the 7.8 per cent peak in December – and was far above the target range.

Multiplicity of factors

Signs of resilience in the labour market and household spending, plus rebounding property prices, will only add to the case for more tightening.

The central bank board will be sifting through that data and weighing it up next to a fresh set of economic forecasts from staff, which will be released in the statement of monetary policy on Friday.

Other items of interest this week include the monthly inflation gauge from the Melbourne Institute on Monday and business turnover numbers from the Australian Bureau of Statistics on Thursday.

US markets ended higher on Friday, paving the way for a stronger open for the Australian Securities Exchange on Monday.

Wall Street’s main stock indices rallied after data showed signs of slowing US jobs growth and an uptick in unemployment, boosting hopes the US Federal Reserve is done with its interest rate hiking campaign.

The Dow Jones Industrial Average rose 222.24 points, or 0.66 per cent, to 34,061.32, the S&P 500 gained 40.56 points, or 0.94 per cent, to 4,358.34 and the Nasdaq Composite added 184.09 points, or 1.38 per cent, to 13,478.28.

At the weekend, the key Australian share price index futures contract gained 14 points to 7000 points.

On Friday, the local market ended higher, with the benchmark S&P/ASX200 index gaining 78.2 points, or 1.14 per cent, to 6,978.2 – its highest finish since October 19.

Also this week, National Australia Bank will release its full-year results on Thursday, when Nine Entertainment holds its annual meetings of shareholders.

—with AAP