The Reserve Bank of Australia (RBA) is widely expected to raise its cash rate from 3.6% to 3.85% at its meeting on Tuesday. This follows strong inflation data released last week. However, some experts warn the hike may harm the recent economic recovery. Only a few, including Goldman Sachs, Deutsche Bank, and AMP, suggest the RBA should hold rates steady. AMP's deputy chief economist Diana Mousina said, "It definitely feels uncomfortable swimming against the tide of opinion," but after debate, her team predicts the RBA should keep the rate at 3.6%. Mousina worries that a hike could "derail the private sector recovery," which has just started in the last two quarters. She also notes that while quarterly inflation is high, monthly data show prices stabilizing in rent, home building, and durable goods. She said underlying inflation at about 3.5% is "not problematic" and a rate hike is "just not necessary for our economy at the moment." Stephen Koukoulas, managing director at Market Economics, also favors holding rates. While acknowledging a hike is "clearly on the table," he points out signs of easing inflation after recent peaks. Koukoulas also highlights concerns over the labor market. Despite unemployment falling to 4.1%, he sees no wage pressure or signs of overheating. He described the current economic improvement as a moment to "take a moment to enjoy it rather than be spooked." Deutsche Bank's chief economist Phil O’Donaghoe warned that a rate hike now would diverge from global central banks, most of which are expected to ease rates in 2026. He added, "There is no Australian mining boom to point to," and warned a quick rate hike might need to be undone soon. The debate continues as the RBA's board meets amid mixed signals from the economy and global uncertainty.