MUFG's framing puts the RBA firmly in the same bucket as other central banks now watching an externally driven inflation shock rather than a domestically generated one, which changes the calculus for how quickly policy might need to respond. The bank reads today's RBA communication as deliberately unhurried rather than dovish, arguing the Board has bought itself time by leaning on softer unemployment and property market signals even while Governor Bullock left the door open to another hike. Markets have already begun pricing that risk, with the two year yield drifting a few basis points higher and a full hike now priced in by next March, a shift MUFG says is entirely attributable to external, not domestic, inflation risk. The bank's own base case still assumes a Middle East deal gets done before the US mid-terms in November, avoiding the need for the RBA to act, but frames this explicitly as a close call rather than a comfortable assumption. In FX, MUFG sees scope for AUD/JPY to retrace more of its late July intervention driven fall, a view consistent with the currently low volatility backdrop it flags elsewhere in its research.---Earlier:MUFG opens long AUDJPY at 111.20, targets 114.50 as yen intervention debate buildsNAB on RBA wording shift: Outlook relatively even handed, sees first rate cut mid-2027Westpac says RBA hold looks entrenched despite hawkish inflation guardrailRBA holds cash rate at 4.35pc for second meeting, flags scope to hike again - analyst take---MUFG isn't forecasting a hike, but it isn't ruling one out either, and neither is the RBA.Summary:MUFG notes Brent crude has extended its rise again with no sign of a breakthrough on reopening the Strait of Hormuz, after President Trump hardened his position by rejecting Iran's reparations demand and arguing Iran must pay for past regional aggressionsThe bank warns that if energy prices keep climbing, September could become a busy month for central banks that may feel compelled to hike rates in response to renewed inflation riskThe RBA held rates at Tuesday's meeting and, while MUFG says a September hike is possible if energy prices rise notably in the coming weeks, it detected no sense of urgency in the Bank's communicationMUFG notes the RBA's own updated forecasts show headline and underlying inflation not reaching the 2.5% midpoint of the target range until early 2028, a profile the bank says implies any worsening of external inflation risk would likely prompt further RBA actionGovernor Michele Bullock said it remained quite possible the RBA would need to raise rates again, weighing weaker domestic conditions, including higher unemployment and a softening property market, against unpredictable upside inflation risk from abroadMUFG's base case assumes the Middle East conflict does not escalate further and a deal is reached before the US mid-term elections in November, meaning the RBA would not need to hike again, though it describes this as a close callAustralia's two year yield rose 2 to 3 basis points on the day and markets are now nearly fully pricing one more RBA hike by next March, a risk MUFG says stems entirely from external inflation pressure Brent crude oil extended its recent gains again, MUFG said, with no sign yet of a breakthrough that would allow the reopening of the Strait of Hormuz. The bank pointed to a hardening in President Trump's public position as a key driver, noting he has rejected Iran's request for reparations and argued instead that Iran must pay for past aggressions across the region. That escalation in rhetoric, MUFG said, raises the risk that inflation pressures tied to the conflict could build again just as markets had begun to hope for de-escalation.The bank's central concern is that a further rise in energy prices could turn September into a busy month for central banks more broadly, several of which may feel compelled to respond with rate hikes if the inflationary impulse from the Middle East intensifies. The Reserve Bank of Australia, which met on the same day, was cited as a case in point. MUFG said a September hike remains possible should energy prices rise notably over the coming weeks, but it detected no particular sense of urgency in the RBA's communication. The suggestion, in the bank's reading, was that with monetary policy already assessed as somewhat restrictive, the RBA has room to wait and must weigh that against signs of higher unemployment and a weakening property market before deciding on any further tightening.That said, MUFG was careful to note Governor Michele Bullock's acknowledgement that it remained quite possible the RBA would need to raise rates again, a comment the bank reads as evidence the Board, like several of its global peers, is now weighing softer domestic conditions against unpredictable upside inflation risk originating offshore. The RBA's updated forecasts reinforced that tension, with headline and underlying inflation not expected to reach the 2.5% midpoint of the target range until early 2028, a profile MUFG says implies the Bank would likely need to act again if external inflation risks were to worsen from here.For now, MUFG's own assumption is that an escalation in the Middle East will be avoided and that a deal will ultimately be reached before the US mid-term elections in November, meaning the RBA should not need to raise rates further. But the bank was explicit that this is a close call, a view it says was reinforced by the tone of today's RBA communication. Markets have already begun to reflect that uncertainty, with Australia's two year yield drifting 2 to 3 basis points higher on the day and one additional rate hike now nearly fully priced in by next March, a risk MUFG attributes entirely to external inflationary pressure rather than anything domestic. Against a backdrop of otherwise low foreign exchange volatility, the bank also sees scope for AUD/JPY to retrace more of the drop triggered by intervention at the end of July. This article was written by Eamonn Sheridan at investinglive.com.