All four of Australia's Big Four lenders now expect the Reserve Bank of Australia (RBA) to raise rates in September, marking a shift in expectations for the central bank's next move.
Australia and New Zealand Banking Group (ANZ), Westpac and Commonwealth Bank of Australia (CBA) were the latest to change their tune, joining National Australia Bank (NAB) in now expecting the official cash rate (OCR) to go up this month. In the case of ANZ, the revised outlook comes on top of its previous forecasts that the RBA will raise rates at its November meeting.
"That would take the cash rate to 4.85%, the highest since 2008," Adam Boyton, head of Australian economics at ANZ, and Jack Chambers, senior rates strategist at the bank, wrote in a joint note.
"The ongoing escalation of the conflict in the Middle East and the tendency of the RBA to view the resultant increase in oil prices as much more of an inflationary shock than a growth shock suggests that a single 25-basis point rate hike in November, after the quarterly consumer price index (CPI) data are released, is no longer the most likely outcome," the duo continued.
ANZ's updated forecast also makes it the first of the majors to expect back-to-back rate hikes, with increases now anticipated at both the September and November meetings.
But markets have already been concerned about the potential for interest rate hikes at the RBA's 28 to 29 September meeting. On Friday of last week, futures priced in a 93% probability of a rate hike at the September meeting.
"Market pricing alone won’t drive the board to hike. But it does raise the risk that its inflation-fighting credibility would be eroded if it did not hike,” said CBA’s Head of Australian Economics Belinda Allen.
All of Australia's top five lenders (the Big Four plus Macquarie Bank) have previously forecasted additional interest rate hikes before year's end. However, until recently, the lenders were split on timing.
NAB was originally the only major lender calling for a rate increase this month. That changed on Friday, when Westpac brought forward its forecast to a September hike, with CBA following suit.
The updated forecasts come after several members of the RBA's leadership team recently signaled growing concern about the possibility of more rate hikes.
"That communication has clearly escalated over recent days," said Luci Ellis, chief economist at Westpac Group.
Boyton and Chambers at ANZ added: "The RBA has also had a range of opportunities over the past week, through its public communications, to pull back expectations of a near-term rate hike. To date, it has chosen not to."
In front of Parliament on Friday, RBA Governor Michele Bullock addressed what she described as the upside risks to inflation.
"Developments since [the August meeting] suggest that although growth in the Australian economy is slowing, some of these upside risks to inflation appear to be materialising," Bullock said.
"There is little sign of resolution of the Middle East conflict," she added. "Oil and related prices have increased sharply again and will add directly to inflation. The global AI boom is driving stronger growth in economies that are key parts of the AI supply chain. It is also driving higher global prices for some AI-related technologies that are supply constrained."
The RBA has already raised the official cash rate (OCR) three times in 2026, lifting rates to their current level of 4.35%. The board has repeatedly made clear that it will not consider cutting rates again until inflation is back within the target inflation range of 2% to 3%.
July's consumer price index didn't do much to tame market fears. The latest print revealed that inflation, while easing slightly, is still above the target, with headline CPI coming in at 3.5% and trimmed mean at 3.6%.
Meanwhile, mortgage holders and investors nationwide continue to contend with a number of headwinds, including elevated living costs, tighter borrowing capacity, a revised federal budget and rising unemployment. Another increase in interest rates would add further pressure to households and investors already navigating these challenges.
Brokers, however, said they have been preparing for the possibility of another rate hike for some time.
"Everyone is coming to the conclusion that this is going to happen [in September]," Emmanuel Marios, founder, chief executive officer and broker at Tasmanian-based brokerage Derwent Finance, told Australian Broker. "All we can do is be prepared and just start educating our clients, and assist them as much as we can. Panicking doesn't change the situation.
"We have expected rate hikes previously," he continued. "One rate hike to another rate hike doesn't change the situation. The consumer market's a lot more educated now than they were 10 years ago. Just having technology at their fingertips, a lot of consumers out there don't need to wait for the RBA to put something on the newspaper to say this is what's happening. People know that it's going to potentially happen in the next couple of days, or the next couple of weeks, and they're just getting prepared for it. It's not going to be a shock to a lot of consumers.
"Obviously, the momentum has started to slow down in the past few weeks," Marios added. "If the rate hike does happen next week, it's going to put the cherry on the cake at the end of the day."
Leo Gagic, chief executive officer of the Finance Broker Association of Australia (FBAA), said additional rate hikes are another sign that the market is entering an extended period of volatility. It also illustrates how important brokers are in Australia's lending landscape.
"Higher rates create challenges for borrowers, but also increase the demand for, and value of, professional mortgage guidance,” Gagic said. "Consumers are increasingly looking for guidance, not just transactions. Brokers who communicate regularly, explain market developments, provide clear insights, and help their clients understand options will build stronger and lasting relationships and loyalty.”
