Big Four Banks Unite in Expectation of November Interest Rate Hike

The big four banks in Australia are now united in their expectation of another interest rate hike before the end of the year, after Westpac joined Commonwealth Bank and ANZ in forecasting a 25-basis-point increase in November.

Westpac's decision to shift its cash rate forecast to 4.6 per cent at the end of November follows data showing stronger household incomes and spending, as well as investment linked to the data centre boom providing a larger boost to the economy than previously expected.

According to Westpac chief economist Luci Ellis, the likelihood of another increase has risen due to the growing evidence of a more resilient household sector and a larger-than-expected impetus from the spillovers from the data centre boom.

The Reserve Bank of Australia (RBA) is expected to wait for the full quarterly inflation data and revised forecasts before confirming the need for another increase, with Ellis suggesting that a September hike remained possible and that the Monetary Policy Board could be split over the decision.