NAB chief McEwan backs forecast for interest rates lift-off

NAB has lifted fixed mortgage rates, while chief Ross McEwan backed his team’s prediction of a 75 basis-point lift-off in the cash rate over the next 12 months.

NAB chief executive Ross McEwan. Picture: Aaron Francis/The Australian

National Australia Bank chief executive Ross McEwan has backed his economics team’s prediction of a 75 basis-point lift-off in the cash rate over the next 12 months.

The NAB chief’s assessment came after Reserve Bank governor Philip Lowe said on Wednesday that a rate hike before the end of this year was now a “plausible” scenario.

Dr Lowe’s previous guidance was that the cash rate was unlikely to be lifted until late 2023 – or more likely 2024 – when inflation was sustainably in the RBA’s target range of 2-3 per cent.

Mr McEwan, who will unveil NAB’s first-quarter trading update on February 10, told Melbourne talkback radio station 3AW that the bank’s view was official rates would rise from 10 basis points to 75 bps “over the next probably 12 months”.

“Rates are going up,” he said.

“They’ve already started in the fixed rate, which is an indication.”

The comments came as NAB on Friday lifted its fixed mortgage rates by up to 0.2 per cent for owner-occupiers and investors.

NAB’s fixed rates are now up to 1.56 percentage points higher than they were 12 months ago.

Westpac chief executive Peter King said on Thursday that any increase in the cash rate would reflect the relative strength of the economy.

“I think if the Reserve Bank decides to lift interest rates, then that means the economy is going to be doing well because unemployment’s down, wages are rising and there is a bit of inflation,” Mr King said.

“The risk is it overshoots, and that risk is there.

“But from what the Reserve Bank governor said yesterday, he is watching that closely.

“We have assessed mortgages with buffers and floors on the expectation rates won’t stay this low forever.”