RBA May Raise Interest Rates Again Amid Inflation Concerns

The Reserve Bank of Australia (RBA) may raise interest rates again later this year to combat inflation, according to major banks' revised forecasts.

Westpac is the latest bank to shift its outlook, abandoning its previous call for no rate changes through the end of 2026. In a recent statement, Westpac Group's Chief Economist Luci Ellis said that 'a rate hike in November moves back into the base case,' citing stronger household incomes and tech-related spending as key factors.

The RBA has been warning about potential inflationary pressures, including the conflict in the Middle East, investments in artificial intelligence, and weak productivity growth in Australia. The bank's target inflation range is 2-3%.

Other major banks, such as ANZ, National Australia Bank (NAB), and Commonwealth Bank of Australia (CBA), have also forecasted further interest rate hikes later this year. While they differ on timing, all three predict a 25-basis-point increase, with NAB anticipating a September hike and CBA and ANZ forecasting an increase in November.