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Big 4 banks now expect a September rate hike
Just a week before the next Reserve Bank meeting, the four major Australian banks have reviewed their forecast, now predicting another rate hike in September.
Ahead of the Reserve Bank of Australia’s (RBA) 29 September meeting, Australia and New Zealand Banking Group (ANZ) and Commonwealth Bank of Australia (CBA) have joined National Australia Bank (NAB) and Westpac in predicting the RBA will deliver a 0.25 percentage point rate hike to 4.60 per cent.
ANZ and CBA forecast a shift to a September hike, following NAB’s call in late August and Westpac’s updated outlook on Friday, 19 September.
The new forecasts come after governor Michelle Bullock told the House of Representatives Standing Committee on Economics last week that inflation risks “appear to be materialising”.
Bullock said inflation remained too high despite the RBA lifting the cash rate by a cumulative 75 basis points this year.
She said that higher oil prices, the conflict in the Middle East, and rising AI-related costs were pushing up prices for consumers and adding to inflation.
Data showed that Australia's annual headline inflation rate fell to 3.5 per cent in the 12 months to July 2026, down from 3.8 per cent in June, above the RBA 2–3 per cent target range.
Canstar data insights director Sally Tindall said that while the markets pushed towards a hike, it was not yet a certainty as the RBA board could be split voting.
“So many households are hurting, yet so many remain resilient. Escalating global conflicts and rising oil prices are playing a part, but so is stronger-than-expected household spending.
“If the RBA does hike, it won’t be doing it lightly,” Tindall said.
She said Thursday’s August Labour Force data would be one of the final indicators available to the RBA before its September meeting.
However, Tindall said the labour market remained resilient despite three rate hikes, making it unlikely the data will change the case for a further increase.
Modelling showed that a 0.25 hike in September would add $91 to the monthly repayments for a borrower with a $600,000 loan at the start of the hikes in 2026 and 25 years remaining.
Further hikes on the horizon
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While all four major banks see a further rate hike as the key risk this year, only ANZ is forecasting a back-to-back increase at the November meeting, taking the cash rate to five hikes in 2026.
ANZ forecasted another 0.25 percentage point increase in November, bringing the cash rate to 4.85 per cent, the highest since 2008.
Tindall said that the bank had now “sounded the alarm”.
“While ANZ is the only major bank to officially put a second hike in its forecast, borrowers with a mortgage should not rule out this possibility,” she said.
“The Board has consistently stated it will do whatever it takes to tame inflation. Given the resilience of borrowers to date, this could mean two hikes, not one.
A further 0.25 percentage point increase in November would add another $92 to monthly repayments on a $600,000 loan, taking the total increase across five 2026 hikes to $456 a month.
Cuts remain potentially on the horizon, with NAB remaining the only bank to forecast a cut in May 2027
CBA’s economic team has today pushed back the timing of the first reduction from May to August 2027, joining ANZ and Westpac.
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