Australia’s economic growth accelerated more than expected in the June quarter, adding to expectations that the Reserve Bank of Australia may need to raise interest rates again as inflation remains stubbornly elevated.

Gross domestic product increased 0.4 percent in the three months through June, exceeding economists’ forecast of 0.3 percent, according to data from the Australian Bureau of Statistics. On an annual basis, the economy expanded 2.1 percent, significantly above the median estimate of 1.8 percent.

The stronger-than-expected growth has raised concerns that economic activity may not be slowing sufficiently for the RBA to bring inflation back toward its target. Alex Joiner, chief economist at IFM Investors, said the economy risks remaining too resilient for the central bank to achieve its inflation objectives and indicated that a rate increase could come as early as September or November.

Financial markets responded by increasing expectations for further monetary tightening. The Australian dollar fluctuated around the mid 71 US cent area, while the yield on policy-sensitive three-year government bonds rose as much as 11 basis points to 4.83 percent. Investors increased the probability of an RBA rate hike by November, with a September move viewed as more likely than not. Markets also priced in an increased probability of another hike in the first quarter of next year.

The GDP figures indicate that economic activity has so far remained resilient despite the RBA’s efforts to moderate demand and contain inflation. The data will be closely assessed by policymakers ahead of the RBA’s September 28 to 29 meeting, when the central bank will determine whether additional tightening is required.

The RBA last month left its benchmark interest rate unchanged at 4.35 percent for a second consecutive meeting after raising rates three times between February and May. However, an upside surprise in inflation data last week and hawkish signals from the central bank’s August meeting have already led several economists to bring forward expectations for another rate increase.

Australia’s bond market has also come under pressure as part of a broader global selloff driven by concerns over government spending, persistent inflation and resilient economic growth. Three-year Australian government bond yields climbed to their highest level since March, while 10-year yields reached their highest level since July 2011.

Household consumption increased 0.4 percent during the June quarter and contributed 0.2 percentage point to overall GDP growth. The household savings ratio also edged higher to 6.5 percent from 6.4 percent.

Compensation of employees increased 1.5 percent during the quarter, reflecting continued competition for skilled workers, higher wages, as well as bonuses and redundancy payments, according to the ABS.

The stronger economic performance comes against a challenging international backdrop, with geopolitical tensions and energy market disruptions adding to inflationary pressures globally. Australia’s annual growth rate was comparable with that of the United States and stronger than that of several other major advanced economies, according to Treasurer Jim Chalmers.

The latest GDP data therefore increase the pressure on the RBA to balance resilient economic activity against persistent inflation, with financial markets now assigning greater odds to additional rate increases over the coming months.