What to Expect From the February 2023 RBA Meeting

Australia's inflation rate rose 7.8% from a year earlier and hit a 33-year high in the final quarter of 2022, exceeding forecasts and prompting money markets to price in an interest-rate hike at the RBA meeting on Tuesday.

Core inflation, a measure preferred by the RBA, accelerated to 6.9% year on year in the October to December quarter, exceeding economists' forecast of 6.5%. The result indicates inflation remains very strong even after 3 percentage points of rate increases and Australia is lagging behind its developed-world counterparts.

"Inflation has probably peaked but remains far too high," said Su-Lin Ong, head of fixed-income strategy at Royal Bank of Canada. "The data likely seal the case for a 25-basis-point hike in February."

Aussies will still be living with higher rates by the end of the year, according to 29 leading economists surveyed by The Conversation at the start of 2023.

Their average forecast is an increase in the bank's cash rate target from 3.1 per cent to 3.6 per cent during 2023.