Of Australia's four major banks, Commonwealth Bank (CBA), National Australia Bank (NAB), and ANZ expect further rate hikes this year. July's inflation data came in stronger than expected, reigniting concerns that price pressures remain robust. NAB expects the Reserve Bank of Australia (central bank) to move to raise rates at its next policy meeting in September, and sees the possibility of another hike in November if economic activity remains resilient. CBA and ANZ forecast a November hike, while Westpac maintains its view of holding steady. CBA's head of Australian economics, Belinda Allen, noted that price momentum has re-accelerated in underlying and domestically driven items, with the pace of disinflation stalling. She expects a November hike but said it could be brought forward to September. The RBA has held the policy rate steady for two consecutive meetings this month.
Expectations of further RBA rate hikes push bond yields up.
ANZ expects rate hikes, which could improve bank margins.
Westpac expects no rate hike, but higher rates could impact its net interest margins.
