Big four banks predict interest rates will rise again in November
A dire prediction has been made about interest rates that no Aussie wants to hear ahead of the RBA’s upcoming Melbourne Cup Day call.
In dire news for Australians struggling with the cost of living crisis, economists from all of the big four banks are all tipping interest rates will rise again in November.
Among the economists predicting that the Reserve Bank of Australia (RBA) will hike rates again is Westpac chief economist Luci Ellis – who until just weeks ago was the assistant governor of the RBA’s economics division.
In one of her first acts in her new job, Dr Ellis forecast the next interest rate move by the RBA would be a cut sometime next year, a position she backflipped on after quarterly inflation data was released on Wednesday.
“I’ve seen enough to make my first-ever rate call to be a prediction of a hike,” wrote Dr Ellis in a note.
The figures showed headline inflation increased by 1.1 per cent over the three months to September 30 quarter, which was above expectations held by both the financial markets — predicting a one per cent rise — and the RBA’s expectations of 0.9 per cent rise.
Westpac is now tipping that the RBA will increase interest rates by another 0.25 per cent when the board meets on Tuesday November 7 – which is Melbourne Cup Day.
CommBank, ANZ and NAB are also tipping a 0.25 per cent rise in November, but prior to the inflation data, NAB was the only big four bank holding this view.
The banks are also putting stock in recent comments by RBA Governor Michele Bullock that it “would not hesitate” to raise interest rates again if there was a material increase in the inflation outlook.
Speaking at the Senate economics select committee yesterday, Ms Bullock did her best to pour water on talk of a rate rise, stating that the RBA was still assessing whether the latest increase in inflation was “material enough to change our views”.
The RBA has kept rates on hold for the last four months, with the last rise in June.
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If interest rates rise another 0.25 per cent on November 7, it will lift the official interest rate to 4.35 per cent from its current level of 4.1 per cent.
Comparison site RateCity said that for the average Australian borrower who had a $500,000 variable rate mortgage before interest rates began rising in May 2022, another 0.25 per cent increase would see their monthly repayments rise by $76.
“Across all 13 hikes this would be a total increase of $1,210 to their monthly mortgage repayments – a 52 per cent increase,” Rate City said.
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