UBS raises Australia rate hike forecast on sticky inflation. Here’s what it means for AUD/USD

UBS has raised its forecast for RBA tightening, now pencilling in a 25bp hike at the May 5 meeting and another in August taking the terminal cash rate to 4.6%. The bank cites sticky underlying inflation despite a small miss in trimmed-mean CPI. UBS says the RBA’s tightening bias is reinforced and that the higher-rate path should be supportive for the Australian dollar medium term, but it remains cautious near term due to U.S. dollar strength. UBS targets AUD/USD at 0.70 by end-June and 0.75 over a 12-month horizon — signalling near-term vulnerability to USD moves but a constructive view on AUD over the year ahead.