Economists see RBA rate hike as early as September after hot CPI

Published Thu, Aug 27, 2026 · 09:21 AM

AUSTRALIA hot inflation spurred economists from Goldman Sachs Group to Commonwealth Bank to predict another interest-rate increase as early as next month, abandoning expectations of no change for the remainder of the year.

The turnaround follows Wednesday’s inflation report showing price pressures remain elevated and came after minutes of the RBA’s August meeting indicated the rate-setting board has low tolerance for higher consumer prices.

Commonwealth Bank of Australia, the nation’s biggest lender, said on Thursday the inflation data would cause the Reserve Bank to “lose patience” and predicted a quarter-point hike to 4.6 per cent in November, with the risk of a move at the Sept 28-29 meeting. “Tighter monetary policy is needed in the Australian economy,” CBA’s Belinda Allen said.

Economists at ANZ Bank and Goldman Sachs also expect the RBA to lift rates in November, with the latter similarly seeing a September risk.

Deutsche Bank AG’s Phil Odonaghoe, who was first to change his call after Wednesday’s CPI, went further and forecast a hike at the September meeting, saying underlying inflation is “intolerably high.”

National Australia Bank’s Sally Auld also switched to calling a September hike, with the risk “biased towards an additional hike in November, especially if activity data shows resilience in coming months.”

Australian bonds have slid for three days following the hawkish minutes and the inflation data. The yield on policy-sensitive three-year government notes was up seven basis points to 4.67 per cent in early trading, the highest in more than a month, as bets for a November hike solidified.

Traders fully priced a quarter-percentage-point rate increase at the November meeting, up from about a 48 per cent chance earlier this week. They reckon there’s a roughly 50-50 chance of a hike next month.

The RBA raised rates at its first three meetings of the year, fully unwinding a brief easing campaign in 2025, to return the cash rate to 4.35 per cent.

It was responding to resurgent inflation that emerged even before the US-Iran war delivered an energy shock to the global economy, exacerbating price pressures.

Australia has become more inflation-prone as sluggish productivity for more than a decade has lowered the economy’s potential growth rate.

Other economists stuck to their hold calls, including Westpac Banking, which said in a report that “while a November rate hike remains a risk, we do not see it as our base case.” HSBC Holdings’ Paul Bloxham echoed that there remains a risk that the RBA opts to raise further.

“A key caveat is that the monthly CPI figures are still being treated by the RBA as only a partial signal indicator,” he said, referring to its view that it will be a couple of years until monthly figures are totally reliable.

He added that “weak growth and declining housing prices are expected to be seen as putting downward pressure on inflation over the forecast horizon.”

The RBA aims for the midpoint of its 2-3 per cent target band, a level it hasn’t reached in almost five years. 

With no other official inflation reading before the September decision, traders and economists will closely watch second-quarter gross domestic product next week and labour market figures for further clues. BLOOMBERG