Interest rates: Commonwealth Bank joins Westpac and NAB in tipping RBA to hike next Tuesday
Commonwealth Bank has shifted its interest rate outlook, joining Westpac and National Australia Bank in tipping a hike next week.
Commonwealth Bank has shifted its interest rate outlook, joining Westpac and National Australia Bank in tipping a hike next week.
NAB has predicted a September hike since late August, while Westpac updated its outlook late Friday afternoon.
ANZ is now the only major bank expecting the Reserve Bank to hold next week, although it expects a hike in November.
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By continuing you agree to our Terms and Privacy Policy.CBA, the nation’s biggest mortgage lender, most recently thought the RBA would hold fire at its September 29 meeting before raising rates in November.
But the bank’s head of Australian economics Belinda Allen on Monday said there had been a build up of factors over recent weeks to see it bring forward its previous call from November to September.
While some economists are predicting as many as three rate hikes will be needed to finally stamp out persistent inflation, Ms Allen remains somewhat less hawkish.
“The risks sit with the need for another rate hike given the persistence in domestic sources of inflation, but this is not yet our base case,” she said on Monday.
“The economy is slowing, rates are restrictive and by the November meeting we think there is a strong chance (85 per cent) that the US will seek a deal with Iran given we see oil inventory depletion in the next five to 10 weeks and a deal will be needed to prevent a sharp spike higher in oil prices.
“As a result, by November oil prices could be lower and as we highlight above, the context of each meeting is important.”
Another widely-expected hike later this month — which would take the cash rate to a 15-year of 4.6 per cent — would add $114 to monthly repayments on a mortgage of $750,000.
Combine that with the RBA’s three rate rises so far this year, that borrower is looking at a staggering $454 monthly jump to their repayments by year’s end.
Should it materialise, a fifth interest rate rise on November 3 — the highest level since the onset of the global financial crisis in 2008 — would add another $115 a month on the same mortgage. This would take a borrower’s monthly repayment to $570 across five hikes.
