Australian Banks Predict Additional Rate Hikes Amid Elevated Inflation

Three of Australia's major banks have revised their forecasts to predict additional interest rate hikes this year. The Reserve Bank of Australia (RBA) has already delivered three rate hikes in an effort to curb inflation, which remains stubbornly elevated.

National Australia Bank (NAB), Commonwealth Bank (CBA), and ANZ are now forecasting a rate hike before the end of the year. NAB sees the possibility of a further hike as early as November if economic activity remains resilient.

Commonwealth Bank's head of Australian economics, Belinda Allen, said that while one month of data should be interpreted with caution, the latest inflation figures suggest the pace of disinflation has stalled.

The RBA held its policy rate steady at 4.35% for a second consecutive meeting this month. Market expectations have shifted dramatically since the release of July inflation data, with the probability of a rate hike to 4.6% in September now at 50%, up from 17% previously.