All four big banks tip 25bp RBA hike on 5 May after CPI spike

March CPI jumped to 4.6% annually. Westpac, CBA, NAB and ANZ all now forecast a 25bp cash rate hike at the 5 May RBA meeting. What variable-rate borrowers should be doing this week.

March monthly CPI came in at 4.6% annually (up from 3.7% in February), driven heavily by a 32.8% jump in fuel prices and a 6.5% annual increase in housing costs. The Q1 2026 quarterly print landed at 1.4% headline and 0.8% trimmed mean, the latter slightly softer than the consensus ~0.9% expected. The trimmed mean (the RBA's preferred measure) is steady at 3.3% annually. All four major Australian banks now forecast a 25 basis point cash rate hike at the RBA's 5 May meeting, with markets pricing in 76% odds of the move (down from 85% earlier in April).

What each major bank is saying

- **ANZ**: "We continue to expect the RBA to increase interest rates by 25bp." - **CBA**: "A third rate hike in May is another line ball decision," but expects the move to occur. CBA noted the softer trimmed-mean print and weaker sentiment surveys "likely to bolster arguments to leave the cash rate on hold." - **Westpac**: "Reaffirm our expectation that the RBA will raise the cash rate by a further 25bps." Westpac is the most hawkish of the four, it sees additional hikes in June and August, with inflation peaking at 5.8% by May before retreating to 4.7% by year-end. - **NAB**: "Continue to see one more 25bps hike by the RBA in May."

Matt Bell, chief economist at Oliver Hume Property Group, has gone further, forecasting headline inflation reaching 5–6% by June, with underlying inflation pushing toward 4.0% by year-end.

What this means for borrowers

A 25bp hike on a $650,000 owner-occupier variable loan is roughly $100/month in additional repayments. Annualised, that's $1,200. The market has been pricing this risk for weeks, so most variable rates already reflect some lender pre-positioning, but the actual move will trigger a fresh wave of pass-throughs from lenders within 1-2 weeks of the RBA decision.

If you're on a variable loan that's more than 18 months old, this is the week to call your lender (or a broker) and ask for a "retention rate" review. Lenders typically have headroom to discount 20-40 basis points off the standard variable rate without needing executive sign-off, and they're more willing to do it ahead of an expected hike than in the reactive period after.

For borrowers considering fixing: the bond market has already priced in roughly 62 basis points of total tightening for the rest of 2026. That means the 3-year fixed rates in our live index already reflect the expected path. Fixing today doesn't avoid the hike, it just locks in your rate at a price that already includes it.

What you should do now

This week, before the RBA decision:

1. **Check what you're paying.** If your variable rate hasn't been reviewed in 18+ months, you're probably 30-50 basis points above the cheapest comparable rate available today. 2. **Run the refinance savings calculator.** It'll show you the monthly delta and break-even months on switch costs. 3. **Don't rush to fix.** Fixed rates have already priced the hike. The question is whether you want certainty over flexibility, and that's a structure question, not a rate-cycle question.

The actual RBA decision lands at 14:30 AEST on Tuesday 5 May. We'll publish the analysis within the hour.

This article references the RBA monetary policy framework, ABS Consumer Price Index data, and economist commentary collected by The Adviser and API Magazine.