Banks forecast rate hikes

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**Carrington Clarke** (0:35)
There's been a dramatic shift in interest rate predictions among some of Australia's biggest banks over the past few hours. CBA joining ANZ in predicting will get a hike in November, while NAB says the RBA will likely act next month. So is more borrower pain all but certain to deal with Australia's inflation problem? While in the United States, Meta has tried to minimise its pain by settling a massive court case, avoiding the ignominy of their CEO being forced to take the stand. But is this the end of their legal woes?
Welcome to ABC Business Daily.

**Alicia Barry** (1:17)
And I'm Finance reporter Alicia Barry and host of The Business on Thursdays.

**Carrington Clarke** (1:21)
Alicia, thank you for joining me. We haven't done a timestamp for a while, but I think it's necessary today. It's just after 11:30 a.m. here in Sydney. And I was on Radio National Breakfast this morning.
And we just had kind of an avalanche of big financial institutions changing their bets when it comes to interest rate outlook here in Australia. What I find quite ironic, funny is that earlier in the year, we had Westpac out on its own predicting that there would be two further interest rate rises. By the end of the year, that would have brought it to five from the three. They were the last to change and eventually said, no, they think it's on hold. Westpac now on its own out of the big four predicting they will be on hold. But that's the reason we've got that time stamp. Let's see what happens later today. What's really interesting is NAB believes that the hike will happen next month. ANZ, CBA think it will happen in November. NAB thinks it will happen next month.
And they think there's a chance that we'll actually see another in November. So again, bringing us to those five interest rate hikes. What do you make of it all?

**Alicia Barry** (2:29)
Yeah, it is really interesting just how changeable the environment has been when it comes to rate hike calls or rate cut calls, but also how quickly the RBAs had to move. Because this time last year we were experiencing three rate cuts. We then saw that reversed at the beginning of the year with February, March and May rate hike, taking us to an interest rate of 4.35% where we see now. And after yesterday's inflation data, it does appear as though the big bank economists at least, and financial markets to an extent, think that there is at least another rate hike in this cycle. The Reserve Bank doesn't really want to hike rates, I don't think. They are very mindful of just how that could potentially hurt people in the economy, businesses, and potentially tip us into what could be recession if it goes too far. But certainly, we are now staring down the barrel of another rate hike if we continue to see these inflationary pressures. So as you say, Carrington, those big four banks have different positions.
But it does talk to, I guess, just the dynamic situation that the economy is in.
If we hadn't seen the Middle East conflict really extend out as long as it's gone, would we be talking about another rate hike, the oil price and the secondary effects of that perhaps. But also, we've just seen a lot of resilience in the economy when it comes to spending.
I think that's what Sally Old at NAB has jumped on in terms of her reaction to now predicting a September rate hike saying that the activity data that the RBA is going to get ahead of its next meeting on the 29th of September, won't be soft enough to deter it from not hiking, if you like. I mean, Michelle Bullock at her last press conference at the August meeting said she personally thinks they might have to go again. So I guess with the data and that commentary, NAB is suddenly drawing the conclusion that they will go at the next meeting, at the end of next month. But it is interesting because the Reserve Bank does like the quarterly CPI, and we don't get that until the 28th of October ahead of the November meeting, which is on the 3rd.