Interest Rate Hike Predicted Before Year's End Amid Economic Shift

Westpac's economists have joined their big bank peers in predicting that interest rates will rise before the end of the year. Chief Economist Luci Ellis cited a resilient household sector, despite tumbling consumer sentiment, and a boost to the economy from the data centre boom as reasons for this shift.

Last week's official GDP numbers highlighted consumers are still spending, with take-up of electric vehicles contributing to this trend. Some travellers redirected their spending locally due to difficulties leaving Australia for the European summer because of the war in the Middle East.

Westpac joins Commonwealth Bank Australia and ANZ in pencilling in a 25 basis point increase in the official cash rate in November, while NAB thinks it'll likely come at the next RBA meeting at the end of this month. Inflation above the Reserve's target of 2-to-3 per cent is also a key influence.

News that makes senseYour trusted source for staying up-to-date with the world around you. Get free daily news updates and analysis, straight to your inbox.Canstar says such a move would lift the monthly repayment on a $600,000 loan with 25 years remaining by $91. This would take the total increase for the year to $363 across a total of four rate hikes.

Westpac Senior Economist Matt Hassan noted that residential property values have declined since February and are now an influence on households, 'clearly it is an influence on households', he said. The ABS reported combined residential property values fell by around $34 billion in the June quarter, marking the first decline in four years.