Big Banks Predict Rate Hike as Inflation Risks Rise

The four major Australian banks, ANZ, Commonwealth Bank of Australia (CBA), National Australia Bank (NAB), and Westpac, have revised their forecasts to predict a rate hike in September. This comes just before the Reserve Bank of Australia's (RBA) next meeting on 29 September.

According to these banks' predictions, the RBA will increase the cash rate by 0.25 percentage points to 4.60 per cent. ANZ and CBA have joined NAB in forecasting a September hike, while Westpac updated its outlook earlier this month.

This prediction is based on Reserve Bank of Australia governor Michelle Bullock's statement that inflation risks 'appear to be materialising'. Despite the RBA lifting the cash rate by 75 basis points this year, inflation remains too high. Bullock cited higher oil prices, the conflict in the Middle East, and rising AI-related costs as contributing factors.

While all four major banks see a further rate hike as a key risk this year, only ANZ forecasts a back-to-back increase at the November meeting, taking the cash rate to 4.85 per cent, the highest since 2008.