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Two of Australia’s big four banks on Thursday reversed their forecast for interest rates, predicting they will rise by 0.25 per cent in November.
The Australia and New Zealand Banking Group (ANZ) and Commonwealth Bank of Australia (CBA) believe Wednesday’s inflation figures will pressure the Reserve Bank of Australia (RBA) to lift the cash rate to 4.6 per cent in five weeks.
The Australia and New Zealand Banking Group (ANZ) is now forecasting a rise for interest rates in November. Supplied
If that happens, it would be the highest cash rate setting the country has seen since October 2011.
The moves come after Wednesday’s figures put inflation for the 12 months to July at 3.5 per cent, and the all-important trimmed mean – the Reserve Bank of Australia’s favoured underlying measure – at 3.6 per cent.
Mortgage borrowers looking for interest rate relief might be disappointed by today's inflation figures.
The Bureau of Statistics data show the annual headline inflation rate dropped to 3.5 percent, down from 3.8 percent.
But the Reserve Bank's preferred measure was steady and still well outside its target.
GFX of Reserve Bank of Australia exterior laid over generic ASX images, May 19, 2025.(ABC News: Kylie Silvester)
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Bureau of Statistics says CPI was 3.5% in July, casting doubt on Reserve Bank meeting its 2.5% inflation target without further hike
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Fears are growing that the Reserve Bank will hit millions of mortgage holders with a fourth rate hike this year, after inflation eased in July but by far less than expected.
Consumer prices climbed by 3.5% through the year, down from 3.8% in the previous month, according to the Australian Bureau of Statistics.
That compared unfavourably to the forecast 3.3% annual rate predicted by economists leading into the result.
The Reserve Bank’s preferred underlying inflation measure, which removes the most volatile prices, had been expected to moderate but instead was stuck at 3.6%.
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