Commonwealth Bank, Westpac, ANZ and NAB have revealed how high they expect the cash rate to rise when the Reserve Bank of Australia (RBA) meets today.
The Reserve Bank is expected to raise interest rates for the sixth month in a row when it meets this afternoon. The official cash rate currently sits at 2.35 per cent.
Three of the major banks are predicting a 50 basis point increase.
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Commonwealth Bank is the only major bank expecting a 25 basis point hike to 2.60 per cent, but says there is a “clear risk” the RBA will opt for a 50 basis point increase.
“We believe the case to slow the pace of tightening at the October Board meeting is strong,” Commonwealth Bank’s head of Australian economics, Gareth Aird, said.
“And the RBA has in many respects already made the case to slow.”
Westpac is predicting a 50 basis point increase from the board today, followed by a 25 basis point increase at the November board meeting.
“We expect it will decide to raise the cash rate by a further 50bps to 2.85 per cent,” Westpac’s chief economist, Bill Evans, said.
“Rate hikes are expected to continue out to February 2023 as the December inflation report is likely to show consumer prices lifting strongly in the December quarter, we expect a 2.5 per cent jump in the headline and a still hefty 1.2 per cent rise for underlying inflation.”
ANZ is also expecting a 50 basis point hike to 2.85 per cent today.
“We think the strength in the domestic data and persistence in global inflation outweigh market turmoil following the UK’s mini-budget and heightened expectations of a global recession,” ANZ Research said on Twitter.
NAB is also predicting a 50 basis point increase in October, followed by a 25 basis point hike in November.
“The overwhelming consensus is for a 50bp hike with 21 out of 28 economists. In the post-Meeting Statement expect discussion of financial stability concerns, especially around households, given the RBA’s Financial Stability Review is published on Friday,” head of market economics at NAB, Tapas Strickland, said.
Borrowers paying extra $760 a month
The figures are based on an owner-occupier borrower with $500,000 debt at the start of the rate rises, with 25 years remaining on their loan.
The Reserve Bank board will meet at 2:30pm AEDT today.