A new economic outlook from Commonwealth Bank points to one final rate hike this cycle in November, alongside a steeper downgrade to its national home price forecast. The report, which also weighs global growth risks and the Reserve Bank's inflation fight, sets out the detail behind both calls.
CBA confirmed its shift to a November rate hike call last month, after July's inflation data came in hotter than expected, but its latest report is the first to detail the reasoning behind it — with the bank's chief economist Luke Yeaman (pictured) noting the Reserve Bank "will remain very cautious and on 'high alert' for the foreseeable future."
The bank now expects the cash rate to reach 4.6% following a November move, though the 28-29 September board meeting is also described by CBA's economists as "live" given recent data and shifts in the RBA's public language.
CBA's revised call brings it into line with the rest of the sector — Westpac dropped its long-held rate-cut forecast just this week, with chief economist Luci Ellis confirming that "a rate hike in November moves back into the base case." All four major banks now expect a rise before year's end, differing only on whether it lands in September or November.
That broader consensus comes even as CBA's own outlook flags a slowing economy — head of Australian economics Belinda Allen (pictured right) said the economy is "embarking on a cyclical slowdown," with growth expected to ease to around 1.5% by year's end after peaking at 2.6% in December 2025. Despite this, inflation has proven more persistent than expected, complicating the case for near-term rate relief.
CBA's home price forecast — a peak-to-trough fall of 9% nationally — features again in its latest economic outlook, reflecting weaker housing market momentum than previously anticipated. The bank pointed to unwinding overexuberance in mid-tier capitals, continued dampening of investor sentiment from budget tax changes, and the extra rate rise now built into its forecasts.
Under the revised outlook, a 9% national fall would return prices to levels last seen in March 2025. Melbourne is expected to bear the brunt with a forecast 12% peak-to-trough decline, taking prices back to January 2021 levels, while an 8% fall in Perth would unwind gains back to October 2025 levels.
For brokers, the twin calls matter on several fronts. A further hike would tighten borrowing capacity assessments just as many clients are already navigating higher repayments, while a steeper-than-expected fall in home values — particularly in Melbourne — could affect loan-to-value ratios and refinancing options for existing borrowers.
CBA noted a "high savings rate will allow households to smooth consumption if desired," suggesting resilience among some borrowers, though the bank still expects consumption growth to slow through the remainder of the year. Clients should be prepared for a further wait on meaningful relief, with two cuts not pencilled in until 2027.
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