Australian Banks Predict Interest Rate Hikes Amid Rising Inflation

Major Australian banks have revised their interest rate predictions following the latest inflation figures. The Commonwealth Bank, NAB, and ANZ now expect interest rates to rise to combat persistently high inflation.

NAB chief economist Sally Auld forecasts an interest rate hike in September, citing that inflation is running hotter than expected. She also warns of a potential additional hike in November if activity data shows resilience in the coming months.

Commonwealth Bank head of economics Belinda Allen predicts a further interest rate hike this year but believes there isn't enough data to justify an increase by September. However, she suggests that rates may be cut in May and August 2027 once inflation falls back towards target.

ANZ's head of Australian Economics Adam Boyton also expects an interest rate hike in November due to high trimmed mean inflation rates. He notes that while the Reserve Bank of Australia (RBA) would likely wait for more data before increasing rates, there are signs of residual seasonality in July monthly CPI.