Commonwealth Bank and ANZ have fallen into line with the country’s two other major lenders forecasting an interest rate rise as soon as next week, changing their position after officials at the Reserve Bank of Australia delivered a stark warning about the dangers of persistent inflation.
RBA governor Michele Bullock told a parliamentary inquiry on Friday that the risks of inflation continuing to rise were “materialising”, and the board would have to decide whether the three interest rate increases already delivered this year were enough to stamp out resurging prices.
ANZ economists, who previously had expected the central bank to lift the cash rate in November, now think the RBA will also raise rates next week.
It is the only major bank forecasting back-to-back rate rises, which would take the cash rate to 4.85 per cent. The other big lenders – CBA, National Australia Bank and Westpac – are tipping just one increase, next week.
“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 points rate hike in November … is no longer the most likely outcome,” said ANZ’s head of Australian economics, Adam Boyton.