By Rahul Trivedi
BENGALURU, Sept 25 (Reuters) - The Reserve Bank of Australia will raise interest rates by 25 basis points to a near 15-year high of 4.60% on Tuesday, a Reuters poll found, as persistent inflation and resilient economic growth strengthen the case for further policy tightening.
While a handful of economists expect the cash rate to reach 4.85% by year-end, most see this month's move as the final rate increase in the tightening cycle.
This marks a dramatic shift from just a month ago, when nearly all economists had expected the RBA to leave rates unchanged in September and median forecasts showed the cash rate peaking at 4.35%.
But intensifying inflationary pressures since the RBA's August meeting, coupled with Governor Michele Bullock's doubts the current rate was sufficiently restrictive to return inflation to the bank's 2% to 3% target range, have reinforced expectations for policy tightening.
All but one of 34 economists polled September 17 to 24 expected the RBA to raise the official cash rate AUCBIR=ECI by 25 basis points to 4.60% - the highest since late 2011 - on September 29. That would be the fourth rate hike this year and a total of 100 basis points.
"The RBA is becoming increasingly impatient with inflation having been above target and needing to really make it clear it prioritises getting inflation back to target over the horizon it has set itself, by late 2027," said Paul Bloxham, chief economist for Australia and New Zealand at HSBC.
Bloxham, who said the case for the RBA to raise rates on September 29 was strong, is one of five economists surveyed who expect another lift next quarter. He reckons core inflation will surprise to the upside in coming months.
While the RBA forecasts trimmed mean inflation, its preferred measure, to slow to 3.3% by end-year, core inflation remained unchanged at 3.6% in July.
Although losing some momentum last quarter, Australia's economy still grew slightly faster than the RBA's estimated 2% speed limit for non-inflationary growth.
"We changed our view when the GDP figures arrived because we were surprised to the upside on growth and to the downside on productivity. At that point, we knew inflation on the monthly print for July had been too high," said HSBC's Bloxham, referring to his forecast shift to a rate rise on Tuesday.
But the vast majority of economists surveyed, 26 of 31, say the cash rate will be 4.60% at year-end.
Among Australia's major banks, CBA, NAB and Westpac shared that view, while ANZ expects it to reach 4.85%.
"We see the risk very clearly tilted to a follow-up increase in November, although that's not our base case at this stage," said Taylor Nugent, senior economist at NAB.
Economists broadly expect the cash rate to remain at 4.60% through the end of the second quarter of 2027, but views begin to diverge sharply from the third quarter.
The median forecast showed the cash rate at 4.35% at the end of next year although economists were divided. While some expected it as high as 4.85%, others saw it at 4.10% or lower.
(Other stories from Reuters global economic poll)
(Reporting by Rahul Trivedi; Polling by Pulkit Khanna and Pranoy Krishna; Editing by Louise Heavens)