Major Banks Forecast Rate Hikes in Australia and New Zealand

Major financial institutions in Australia and New Zealand are forecasting aggressive interest rate hikes as rising global oil prices and economic momentum fuel inflation risks. In Australia, the four largest lenders—ANZ, CBA, NAB, and Westpac—now reach a consensus that the Reserve Bank of Australia will raise the official cash rate by 0.25 percentage points to 4.60% at its September 28-29 meeting. Governor Michele Bullock noted that the global AI boom and Middle East conflict are contributing to these upside risks, with headline inflation remaining at 3.5%, above the target range.

In New Zealand, ANZ economists have significantly revised their outlook, predicting the Official Cash Rate will peak at 3.50% following three additional hikes in October, February, and March. Chief economist Sharon Zollner cited a sharp increase in crude oil prices and stronger-than-expected domestic momentum, including 2.6% annual GDP growth in the second quarter, as primary drivers. While Kiwibank economists cautioned that October hikes may be premature given economic fragility, financial markets imply a 75% probability of a rate increase to 3%.

Anna Breman, Governor of the Reserve Bank of New Zealand, warned that persistent oil price increases could result in higher near-term inflation than previously assumed. Following a September rate increase to 2.75%, the central bank is monitoring global developments and long-term interest rates ahead of its next policy decision on October 28.