Financial markets are speculating whether the Reserve Bank’s expected interest rate increase on Tuesday could be its second-last act of policy tightening this cycle, as investors and central banks increasingly back the belief that inflation has peaked.

Heading into 2023, economist consensus was aligned at two cash rate increases this year, taking the peak Reserve Bank rate to 3.6 per cent. But rates traders were more hawkish, projecting a peak of 3.8 per cent at the time.