Today, the Reserve Bank of Australia is scheduled to release its Cash Rate data. The big query now on the mind of the market participants is whether the central bank will or will not raise interest rates. Australian interest-rate swaps yesterday signaled that investors are concerned that RBA Governor Glenn Stevens is likely to raise the borrowing costs earlier than is needed, to contain inflation for the first time in three years. Based on statistics, the Credit Suisse Group AG index showed a 15 percent probability that the RBA is likely to escalate the overnight cash rate to 5.0 percent from 4.75 percent today. Another swaps gauge indicated that the central bank is likely to slash the developed world’s highest benchmark by 0.16 percentage point in the next 12 months. The last such split was occurred July 2008, two months before Lehman Brothers Holdings Inc. collapsed.

Likewise, economists from different organizations also have a diverse outlook on the movement of interest rates in Australia. Analysts from the Australia & New Zealand Banking Group, one of the Australia’s four biggest lenders, anticipates the first increase since November last year. Whereas, the Westpac Banking Group expect that the central bank is possible to hold interest rates before curtailing rates in December. This divergent prospect on the benchmark rate was attributable to the sundry stance of various sectors of economy. Household sector are closing their wallet as rising energy bills, falling home prices, and global uncertainty sapped confidence in the region. Likewise, the Retails Sales unexpectedly dropped in May, the second fall in three months. This sluggish growth of the Australian economy was affected by its vulnerability on both the European and US debt crisis.

On the contrary, some analysts are looking forward for an interest rate hike today as the booming mining industry fuels further inflation. In fact, evidence was released last week as the Consumer Price Index boosted by 0.9 percent in the second quarter of 2011, which exceeded the 0.7 percent increase of median expectations that stirred the Aussie to surge to a record high of 1.1063, a 29-year peak.  This proliferation was led by the costlier food, clothing, and health care. Thereby, it provides a potential ground for the RBA to raise interest rate. However, it was oppose by other median consensus as they believe that the underlying inflation had been declining on concerns that the western financial debt predicament is likely to roil the global markets.

Traders are expected to react after the release of RBA Rate Statement. A hawkish sentiment from the statement is likely to upgrade further the Aussie, otherwise to rock its value. Market participants are hoping for a suitable policy action of the RBA to achieve sustainable growth and price stability simultaneously.