Major bank economists are increasingly aligned on the view that the Reserve Bank of Australia will raise interest rates again this year, sharpening the near-term outlook for Australian rates markets. Following Commonwealth Bank of Australia’s latest call, six of the seven institutions covered in this report now expect at least one more increase. The main disagreement is now timing, with forecasts split between a September move and a November move.

That shift is likely to keep upward pressure on short-end bond yields and the Australian dollar ahead of the September 28 to 29 meeting. With the RBA having signalled it is watching incoming inflation data closely, markets are expected to treat each release as relevant to the decision-making path, including the August labour force figures and GDP. The next major inflation checkpoints are the August CPI print due on 30 September, followed by the September quarter data arriving on 28 October, just before the 2–3 November meeting. Westpac remains the main outlier, still expecting rates to hold, which means any further data surprise could still move the consensus again.

Almost every major bank now expects the RBA to hike again this year, with the remaining debate centred on timing and Westpac’s hold view.

Major bank calls

• CBA has switched to a 25 basis point RBA hike in November to 4.60%, saying the broad-based upside surprise in July CPI has crossed the threshold needed to trigger further tightening. The bank also said there is some risk of an earlier September move. (CBA note, 27 August)
• ANZ expects a November hike to 4.60%, with head of Australian economics Adam Boyton saying the data suggest inflation risks are closer to crystallising. (Reuters)
• Goldman Sachs has also moved to a November hike call, joining ANZ. (AFR)
• Citi’s Josh Williamson sees the cash rate at 4.6% this year, having previously flagged November, and said the risks are tilting toward further rather than fewer hikes. (AFR)
• UBS economist Stephen Wu says a November hike is more likely than September, arguing that an earlier move would signal the RBA sees itself as behind the curve and could open the door to multiple hikes. (Reuters)
• NAB now expects a September hike to 4.6%, saying July CPI ran hotter than the RBA anticipated and that the central bank has repeatedly signalled it would act if upside inflation risks were realised. (Reuters)
• Deutsche Bank also expects a September hike, with chief economist Phil O'Donaghoe describing July’s trimmed mean inflation as intolerably high. (AAP)
• Westpac remains the outlier on direction, still expecting the RBA to hold rates for the rest of the year despite the hot CPI print, citing stable housing costs and a softer labour market and wage outlook. (Westpac note)

National Australia Bank and Commonwealth Bank have become the latest major banks to switch to expecting a 25 basis point hike in November that would lift the cash rate to 4.60 per cent. In a note from its Global Economic and Markets Research team, CBA’s head of Australian economics Belinda Allen said the broad-based upside surprise in July’s CPI had crossed the threshold needed to materially increase the likelihood of another hike. She described the reading as the final straw after months of RBA commentary emphasising a low tolerance for further inflation surprises.

CBA said the most likely meeting is 2–3 November, after the September quarter CPI is released on 28 October, but it did not rule out an earlier move at the September 28 to 29 meeting given the RBA’s recent rhetoric.

NAB and CBA’s moves bring them into line with a growing majority of major bank and institutional forecasters, although the group remains divided on timing. ANZ was among the first to shift, with head of Australian economics Adam Boyton saying the July data suggested inflation risks flagged in the RBA’s August minutes were closer to crystallising, prompting a move to a November hike call. Goldman Sachs joined ANZ on a November call the same day.

Citi’s Josh Williamson, who had previously pencilled in a November increase, told the AFR he now sees the cash rate at 4.6 per cent this year, with risks tilted toward further rather than fewer hikes. UBS economist Stephen Wu has argued that a November move remains more likely than September, saying an earlier hike would signal the RBA sees itself as behind the curve and could open the door to a longer tightening cycle. He said a September meeting could instead be used to prepare the ground for a move in November.

On the other side of the timing debate, NAB has shifted to expect a September hike, also to 4.6 per cent. In a note to clients, NAB economists said July CPI showed inflation running hotter than the RBA had expected as recently as early August. They also pointed to the central bank’s repeated signalling in recent weeks that the Monetary Policy Board would act if upside risks to inflation were realised.

Deutsche Bank maintains the same September view. Chief economist Phil O'Donaghoe described July’s trimmed mean inflation as intolerably high and argued there is little to be gained by waiting until November, though he acknowledged that more dovish board members may prefer to delay.

Westpac remains the most notable holdout on direction altogether. The bank has said it still expects the RBA to hold rates for the remainder of the year, arguing that housing cost inflation remained broadly as expected in July and that a softer labour market and weaker wage outcomes reduce the likelihood of a November move, even as it acknowledges the risk of a hike has increased.

CBA said the case for further tightening was reinforced by signs that businesses are able to pass on higher costs, the ongoing supply shock from the Middle East conflict, the Fair Work Commission’s award wage decision flowing through to labour-intensive services, and continued resilience in discretionary spending. For now, that keeps the focus on whether the inflation data between now and early November confirm the recent jump in price pressures or leave the RBA room to wait.

The bank still expects the economy and labour market to moderate enough to allow rate cuts in 2027, pencilling in May and August as the likely timing. It said, however, that a November hike would reflect near-term inflation persistence rather than a materially stronger growth outlook.