Breaking: Australian economy grows faster than expected, raising rate hike risk

Australia’s economy expanded faster than expected in the June quarter, strengthening expectations that the Reserve Bank of Australia could raise interest rates as soon as this month.

The economy grew 0.4% in the three months to June, compared with forecasts for a 0.3% increase. Annual growth reached 2.1% in the year to June 30, seasonally adjusted, ahead of the 1.8% economists had expected.

The figures increased market expectations of a September rate rise. Bloomberg analysis of futures market pricing put the implied probability of a move by the Reserve Bank of Australia at about 60%.