Australian Banks Predict Rate Hike in November Amid Strong Inflation Print

Three of Australia's major banks have forecast another rate hike this year after a hot inflation print in July. The Commonwealth Bank of Australia, National Australia Bank, and ANZ now expect an increase in November, while Westpac remains on hold from here.

NAB predicts an imminent rise from the Reserve Bank of Australia at its next policy meeting on September 29-30, citing that the risk is biased towards an additional hike in November if economic activity stays resilient. CBA's head of Australian economics, Belinda Allen, said 'the renewed strength across a range of underlying and domestically influenced prices suggests the pace of disinflation has stalled.'

The Reserve Bank of Australia held interest rates steady at 4.35% this month for a second consecutive meeting after three rate hikes this year aimed at taming inflation. Markets now see a 50% chance that the RBA would hike interest rates to 4.6% in September, up sharply from just 17% before the inflation data.

A total tightening of 30 basis points is now priced in by February next year. Policymakers have warned that they would hike again if inflation risks build.