Commonwealth Bank on Thursday joined ANZ in forecasting a 0.25 percentage point cash rate increase in November, lifting Australia's official interest rate to 4.60 per cent.
If the predictions prove correct, the cash rate will reach its highest level since October 2011, piling fresh pressure on Australian borrowers who are already struggling with soaring living costs.
The surprise calls mark a sharp turnaround after all four major banks had previously expected the Reserve Bank of Australia (RBA) to keep rates on hold before cutting them, although not until 2027.
Reserve Bank of Australia governor Michele Bullock and the central bank board will next meet in September to assess economic conditions.
The Reserve Bank serves as Australia's monetary authority, setting the target cash rate to maintain price stability and keep consumer inflation within its target range. When the RBA raises the cash rate, major commercial lenders typically pass the increase on to variable rate mortgage holders.
Impact on Australian mortgage repayments
A quarter-percentage-point increase would add about $91 a month to repayments on a $600,000 mortgage with 25 years remaining, according to analysis by financial comparison group Canstar.
For homeowners who have endured three rate hikes so far this year, monthly repayments would be roughly $363 higher than they were at the start of 2026.
The accumulative financial pressure is even higher for borrowers with larger balances on their home loans.
Canstar data insights director Sally Tindall said the latest inflation report had forced economists and the financial market to rapidly reassess the outlook for interest rates.
"The economic narrative has taken a U-turn in the space of just a couple of days," she said.
"The central bank has warned the risk lies with a hike, and based on Wednesday's inflation figures, ANZ has now put a date on that risk."
Tindall added that a 0.25 per cent hike would have a significant impact on larger mortgages.
"A 0.25 hike might not sound like much, but for those with a $1million mortgage, the impact is significant, adding an extra $152 per month to repayments," Tindall said.
"That's an extra $605 these borrowers would have to stump up every month compared to what they were paying at the start of the year."
Sticky core inflation figures
The sudden revision in bank forecasts followed official inflation data published on Wednesday by the Australian Bureau of Statistics (ABS), the national agency responsible for tracking consumer prices.
Data showed headline inflation slowed to 3.5 per cent in the year to July, down from 3.8 per cent in June.
However, trimmed mean inflation, which is the Reserve Bank's preferred measure of underlying price pressures, was unchanged at 3.6 per cent for a second consecutive month. Trimmed mean inflation strips out extreme monthly price swings to provide a clearer measure of core cost pressures.
ANZ revised its cash rate forecast immediately after the inflation figures were released. National Australia Bank (NAB) confirmed its own cash rate outlook is now under review.
Tindall explained that headline inflation had fallen mainly because of a spike in electricity and travel costs a year earlier dropping out of calculations, rather than clear evidence that inflation was now under control.
"Core inflation provides a clearer picture of the troubles in the figures," she said. "In the last eight rounds of monthly data the annual figure has not gone down. Not once."
Reserve Bank board meeting warnings
AMP chief economist Shane Oliver said Wednesday's inflation figures were "way too high" and reinforced the case for another interest rate hike before Christmas.
Oliver argued the drop in annual inflation painted a misleading picture because it was mostly driven by a notably high inflation reading from a year earlier dropping out of the calculation, rather than a real easing in price pressures.
"Annual CPI inflation only fell because of the very high monthly rise a year ago dropping out of the year-on-year calculation," Oliver added.
The revised forecasts were further bolstered by the Reserve Bank's August board meeting minutes, which highlighted the possibility of further policy tightening if inflation risks intensified.
The minutes noted that "several members judged that it was quite possible that the upside risks to the inflation forecast would crystallise, requiring some further tightening."
With underlying inflation failing to cool as expected, Australian borrowers face renewed uncertainty over mortgage repayments ahead of the RBA board's upcoming policy decisions.
