Westpac Stands Alone as Big Four Banks Shift to Rate Hike Expectations

Three of Australia's Big Four banks have adjusted their Reserve Bank of Australia (RBA) rate forecasts following the release of hot inflation data. ANZ, NAB, and Commonwealth Bank of Australia (CBA) now expect a cash rate hike before the end of the year.

NAB chief economist Sally Auld stated that the risk is skewed towards an even earlier move due to the RBA's repeated signals about acting on upside risks to inflation. CBA economist Belinda Allen noted that capacity constraints and higher costs linked to supply chain issues have increased the likelihood of another rate hike.

However, Westpac remains a holdout, with senior economist Justin Smirk arguing that the inflation surprise does not yet clear the bar for tighter policy. He pointed out that new dwelling costs and rents came in broadly as expected, while the housing downturn has limited builders' pricing power.