{"id":30537,"date":"2026-03-12T11:59:44","date_gmt":"2026-03-12T11:59:44","guid":{"rendered":"https:\/\/www.vtmarketsglobal.com\/en\/uncategorized\/30537\/"},"modified":"2026-03-12T11:59:44","modified_gmt":"2026-03-12T11:59:44","slug":"td-securities-expects-the-rba-to-lift-rates-twice-restoring-the-cash-rate-to-4-35-supporting-aud","status":"publish","type":"post","link":"https:\/\/www.vtmarketsglobal.com\/en\/live-updates\/30537\/","title":{"rendered":"TD Securities expects the RBA to lift rates twice, restoring the cash rate to 4.35%, supporting AUD"},"content":{"rendered":"TD Securities forecasts the Reserve Bank of Australia will lift the cash rate by 25 bps in March and another 25 bps in May. This would unwind last year\u2019s cuts and take the cash rate back to 4.35% by May.\n\nThe reasoning cited includes GDP growth running above potential, a tight labour market, and rising inflation risks. Policy focus is described as leaning more towards inflation expectations than unemployment.\n\n

Australian Demand Signals Stay Firm<\/h3>\nS&P Global\u2019s Composite New Orders data show Australia\u2019s new orders are expanding, listed as above 50, and are the highest among developed-market peers. NAB\u2019s February Business Survey showed forward orders at their highest level since late 2022.\n\nThe article notes limited spare capacity in the economy and wide variation in NAIRU estimates. Treasury is cited at 4.25%, while RBA testimony to the Economics Legislation Committee is cited at 4.6%.\n\nIt also refers to developments in domestic data and Iran as factors that could affect the inflation outlook. The piece states that recent data have pointed to upside inflation information and reinforced the view that spare capacity is limited.\n\nLooking back at the analysis from early 2025, the call for the Reserve Bank of Australia to hike rates twice to 4.35% by May of that year was on the money. That move was driven by strong growth and a tight labour market, which forced the RBA’s hand. We are now seeing a similar setup unfolding in March 2026.\n\n

Trading Implications For Rates Vol And Fx<\/h3>\nThe Australian economy is once again showing signs of running hot, much like it did in early 2025. The latest Judo Bank Flash Composite PMI for March came in at a strong 52.4, indicating solid business expansion and order books. Meanwhile, the labour market remains incredibly tight, with the unemployment rate holding at a low 3.9% in the most recent report.\n\nThis strength is creating renewed inflation problems, just as we saw back then. The latest quarterly CPI figure surprised many by coming in at 3.8%, a noticeable acceleration and still well above the RBA\u2019s 2-3% target band. This data confirms that the economy has very little spare capacity left to absorb price pressures.\n\nFor derivative traders, this means the market is likely underpricing the risk of further RBA rate hikes from the current 4.35% level. We believe traders should look at paying fixed on 2-year interest rate swaps. This position will profit if the RBA is forced to hike rates at least once or twice more this year to re-establish its credibility.\n\nIn the options market, rising uncertainty points towards higher volatility. Buying call options on Australian 3-year bond futures offers a way to position for rising yields with a defined risk. This strategy would benefit from a hawkish shift in the RBA\u2019s tone in the coming weeks.\n\nThis environment should also be positive for the Australian dollar, especially as other major central banks are considering rate cuts. Traders could consider buying AUD\/USD call options to position for a stronger currency. The widening interest rate differential between Australia and the United States makes this a compelling trade.\n\nCreate your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b>\n

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Start trading now – Click here<\/a> to create your real VT Markets account <\/strong> <\/p>\r\n","protected":false},"excerpt":{"rendered":"

TD Securities expects RBA to hike 25bp in March and May amid tight capacity, rising inflation.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-30537","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/30537","targetHints":{"allow":["GET","POST","PUT","PATCH","DELETE"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=30537"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/30537\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=30537"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=30537"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=30537"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}