A hawkish speech from RBA governor Bullock has all but eliminated chance of a September hold
All four of Australia's major banks are now forecasting the Reserve Bank of Australia (RBA) will lift the official cash rate by 25 basis points to 4.6% next week.
It comes after Commonwealth Bank (CBA) and ANZ brought forward their previous November calls on Monday morning – a fortnight after all five major forecasters abandoned an earlier ‘rate hikes are done’ narrative within days of the July inflation print.
The universally expected shift in central bank rates would take mortgage holders to the highest cash rate since 2011, as the RBA's own communications and market pricing built the case for moving earlier than previously anticipated, following the surprise July inflation print.
CBA switches
CBA had been forecasting a November move when it abandoned an earlier "on hold" call in August.
But the bank's head of Australian economics Belinda Allen today confirmed the switch to this month, pointing to the tone of recent RBA communications and market pricing.
Allen said the risk sits with the need to tighten monetary policy further beyond September given the inflation backdrop, though it is not an easy decision to push monetary policy further into restrictive territory.
The trigger was RBA governor Michele Bullock's appearance before the House of Representatives Standing Committee on Economics last week, alongside hawkish remarks from deputy governor Andrew Hauser and assistant governor Sarah Hunter.
"The bottom line is that we need to get inflation back down because if we don't, that is a worse outcome across the board," Bullock told the committee.
Allen said the market had expected Bullock to strike a more balanced tone, "but instead, the Governor noted 'some of these upside risks to inflation appear to be materialising' and commentary around inflation remained hawkish."
CBA still expects the RBA to resume cutting rates in 2027, though it has pushed the timing of that easing cycle later than previously forecast.
ANZ adds a second hike to its call
ANZ's shift to September came with a sting in the tail: the bank has also retained its forecast for a follow-up 25-basis-point rise in November, which would take the cash rate to 4.85% – its highest level since 2008.
ANZ's head of Australian economics Adam Boyton linked the change directly to the escalating conflict in the Middle East and its effect on oil prices, saying the ongoing escalation of the conflict and the RBA's tendency to view the resultant oil price increase as more of an inflationary shock than a growth shock suggests a single 25-basis-point hike in November is no longer the most likely outcome.
Boyton added that a September vote would most likely be split, but the disagreement would be about timing rather than direction.
Allen, however, expects a unanimous decision: "Given recent inflation data and the context of the meeting we expect to see a unanimous decision. But the decision arguments to hike are not one sided. The case to leave the cash rate on hold is expected to receive some attention."
"The economy is slowing, the labour market is shifting back into balance and home prices are falling. At 4.6% monetary policy is restrictive and will see those with a mortgage facing a higher mortgage rate than seen since 2011 and 25bp above the peak seen ahead of the 2025 cutting cycle."
A fourth hike in a year of surprises
If delivered, September's move would be the fourth cash rate increase of 2026 – and the fourth time borrowers have watched lenders move in lockstep.
CBA, Westpac and ANZ followed NAB in raising variable rates after the March hike took the cash rate to 4.1%, with Canstar.com.au data insights director Sally Tindall noting at the time that a typical $600,000 mortgage with 25 years remaining would see roughly $91 added to monthly repayments per hike.
Two months later, Macquarie Bank moved first to lift variable rates following the RBA's May call, which took the cash rate to 4.35% – the level it has held at since.
More recently, NAB and ANZ raised their fixed rates last week, a telling sign of what they expect from the RBA next Tuesday, 29 September.
