CBA Economists See Rate Rise Looming in November

Commonwealth Bank (CBA) economists have revised their forecast for interest rates in Australia, citing a stronger-than-expected July inflation result. They now expect the Reserve Bank of Australia (RBA) to raise the cash rate by 0.25 percentage points at its November meeting, taking it to 4.60 per cent.

The change in outlook comes despite no significant changes in the broader economic picture, including slowed growth and weakened housing market conditions. However, inflation has proven more persistent than expected, with the July CPI result showing renewed strength across various underlying and domestically influenced prices.

CBA Head of Australian Economics Belinda Allen said that the RBA's willingness to raise rates again if upside inflation risks materialized was a key factor in their revised forecast. The November meeting is seen as the most likely timing for a rate rise, given it coincides with the release of September-quarter inflation figures and fresh RBA economic forecasts.

While an increase in September remains a risk, CBA does not currently see it as the most likely outcome. However, Allen cautioned that there is still uncertainty around this scenario, with different views on the Board that will need to be debated.