Another rate hike coming in Australia, AI hacks continue to reverberate globally

Australia’s central bank is all but certain to raise its key interest rate to 4.6% when it hands down its decision at 2:30 p.m. on Tuesday. If it doesn’t, it would be one of the bigger policy surprises seen in recent years.

But assuming — as every economist surveyed by Bloomberg does — that borrowing costs will go up tomorrow, the next question is whether they will do so again in November. This is where Governor Michele Bullock’s press conference an hour after Tuesday’s announcement will be important. What message will she deliver?

Reserve Bank officials have made it clear in recent weeks that their tolerance for inflation persistently above the top of the 2-3% target is wearing thin. Yet wars in the Middle East and Eastern Europe keep pushing energy costs higher and these keep filtering through Australia’s economy and driving up prices.

But there are some potential restraints. Another rate rise is likely to exacerbate a housing downturn — already reverberating across the economy — and there are signs household spending might be starting to cool. In addition, Australia’s jobless rate keeps edging higher and that should help alleviate some of the upward pressure on prices.

Either way, it’s going to be a fascinating few weeks in the lead up to the Nov. 2-3 policy meeting for RBA watchers. — Michael Heath, editor

What’s happening now

The three rate hikes already this year and falling home prices continue to damp activity in the housing market, with Cotality reporting that the auction clearance rate declined to a 10-week low as a long weekend in Melbourne and the threat of higher borrowing costs weighed on sentiment.

The heads of artificial intelligence firms OpenAI and Anthropic have been called on to appear before an Australian Senate inquiry to answer questions after the recent revelation of a hack of a government website.

Australians shouldn’t worry that any sensitive data was accessed in that hack, Deputy Prime Minister Richard Marles said Sunday.

The budget deficit for last financial year was smaller than originally forecast in May’s budget, Treasurer Jim Chalmers said Sunday, with the government shrinking it by “billions of dollars” compared with what it said just five months ago.

South Africa’s Gold Fields has expressed interest in acquiring Northern Star Resources, according to people with knowledge of the matter, a potential blockbuster deal that would deepen the miner’s bet on Australia’s prolific deposits of the metal.

What happened overnight

Iran stuck to its seven-day proposal for reopening the crucial Strait of Hormuz, saying it won’t soften its conditions, while President Donald Trump sent mixed signals about his willingness to reach a deal.Anthropic Chief Executive Officer Dario Amodei is set to have dinner with President Donald Trump on Sunday night, with the meeting bringing together two men at opposite ends of the artificial intelligence safety debate. In another AI security breach, OpenAI said it had paused training its most capable models after another agentic AI system that was being trained in what was supposed to be a secured, internet-free environment was able to gain access to the web.The AI boom is driving a huge increase in profits for some firms, and that is flowing through to the coffers of governments, with South Korean excess tax revenue possibly to exceed 50 trillion won ($37 billion) this year, according to a Yonhap News report.

One more thing...

Across China, tax officials have gone into overdrive to boost receipts from the country’s richest people and biggest companies. They’ve rewritten the rules on offshore trusts, launched the biggest raid for back taxes on local companies in years and set their sights on the more than $1.7 trillion of wealth that Chinese residents hold in Hong Kong alone.

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