CommBank is no longer backing a November cut to the cash rate in the wash-up of Tuesday's Reserve Bank of Australia (RBA) decision to leave the rate on hold at 3.60%.
See also: Current interest rates Australia
The decision itself was universally expected but it was the accompanying monetary policy statement and media conference that led CBA economists to change their forecast.
The move falls into line with last week's decision by NAB economists to can their November rate cut call on the back of higher-than-expected monthly inflation data.
'Tension' in the data
At the time, CBA economists said the November cut was "not a done deal", noting "tension" was building in the economic data.
Monthly CPI data for August showed the annual rate of inflation had climbed to 3.0%, its highest read since July last year.
Prior to the meeting, CBA economists had flagged a consumer-led upswing was underway in the economy, buoyed by a tight jobs market and household spending recovering faster than expected.
But it was the hawkish tone in the RBA's monetary policy statement and media conference - "a little more hawkish than expected" - that led CBA economists to can their November rate cut forecast.
RBA warns (again) on sticky inflation
In her post-meeting media conference, Reserve Bank governor Michele Bullock confirmed the board would need to rethink further rate cuts if inflation continues to surprise on the upside.
She said her focus was on determining the interest rate path that would deliver inflation sustainably within the RBA's 2-3% target band.
"That could mean a couple more reductions," Ms Bullock said, "it might not.
"I don't know at this point and we'll look at all this again in November."
Markets are now turning their sights to the key September quarterly inflation figures, the RBA's preferred data, which is due out the week before the next monetary policy meeting on 3-4 November.
CBA economists have revised their data forecasts to 0.8% trimmed mean inflation for the quarter, up from 0.7%, and an annualised figure of 2.7%, remaining steady with the previous quarter.
But they expect inflation to moderate again after a stronger September quarter print.
"We expect the RBA to ease the cash rate one more time still and now expect this in February 2026," the bank's update concluded.
What are other banks forecasting for the cash rate?
Westpac acknowledged a November cut is "far from assured" after Tuesday's RBA meeting but said the rate-cutting phase is not over.
Westpac chief economist Luci Ellis said the RBA's language choice suggests it "remains sensitive to even small upside risks to inflation".
ANZ agreed the RBA's post-meeting statement was a little more hawkish than expected, heightening the risk of no cash rate cut in November.
ANZ has maintained the final cut in the current downcycle will see the cash rate remain at 3.35% "for a considerable period" - that's 25 basis points below its current rate.
It said its confidence in the number "remains higher than its conviction on the exact timing".
For now ANZ is retaining its call of a November cut, ahead of the release of key economic data later this month.
Advertisement
Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.94% p.a. | 5.98% p.a. | $2,978 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.89% p.a. | 5.80% p.a. | $2,962 | Principal & Interest | Variable | $0 | $0 | 80% |
| Promoted | Disclosure | ||||||||||
5.99% p.a. | 5.95% p.a. | $2,995 | Principal & Interest | Fixed | $0 | $0 | 60% |
| Promoted | Disclosure | ||||||||||
5.93% p.a. | 5.93% p.a. | $2,975 | Principal & Interest | Variable | $0 | $395 | 70% | Disclosure |
