Business

Markets Bet on RBA Rate Hike to 4.60% as Inflation Pressures Build

Abdul Mannan September 28, 2026 • 1 min read

Modern office tower in Sydney at dusk with the Australian flag flying, home to the Reserve Bank of Australia ahead of its rate decision.

Australia’s central bank is widely expected to raise interest rates on Tuesday, with all four major banks forecasting a quarter-point increase that would lift the cash rate to 4.60%.

The Reserve Bank of Australia’s board meets on September 28–29, and financial markets now price in roughly a 90 to 95% probability of a hike, according to multiple analysts — a sharp shift from the roughly 30% priced before July’s inflation figures.

Commonwealth Bank, Westpac, NAB and ANZ all shifted their forecasts after Governor Michele Bullock told a parliamentary committee that upside inflation risks flagged in August appeared to be “materialising”. The case for tightening rests on stubbornly sticky core inflation at 3.6% year-on-year, stronger-than-expected GDP growth, and Brent crude climbing above US$100 a barrel amid the Middle East conflict.

A move would punish borrowers already under strain. Analysis by Canstar suggests a 25-basis-point hike adds $91 a month to a $600,000 mortgage — and if ANZ’s call for a follow-up November hike to 4.85% materialises, borrowing costs would reach their highest level since the 2008 global financial crisis.

Banks are already moving ahead of the decision. Eighteen lenders have raised fixed mortgage rates in the past three weeks alone, with Macquarie hiking twice, signalling expectations that borrowing costs will stay “higher for longer”.