Australia's Banks Flip on RBA Hikes, Boosting AUD/JPY Toward 115

Australia's Big Four banks have shifted their expectations on Reserve Bank of Australia (RBA) hikes, with three of them now anticipating another increase in interest rates this year. The sudden change is driven by a series of recent releases that all point to the same direction: higher inflation and strong household spending data.

NAB has taken the most aggressive position, forecasting a September hike to 4.60% on the view that July's inflation reading was hotter than expected. CBA changed its call on Thursday to a November hike to 4.60%, citing the broad-based upside CPI surprise as sufficient to trigger further tightening.

ANZ has also moved to a November hike, with Australian economics head Adam Boyton saying inflation risks are 'closer to crystallising'. Westpac remains the lone holdout, maintaining its call for rates to stay at 4.35% through year-end.