September RBA Rate Rise Now All But Certain for Borrowers
All four major banks now forecast a 25-basis-point rate hike on 29 September, with ANZ also tipping a follow-up rise in November.
The Reserve Bank of Australia is set to lift the official cash rate for the fourth time in 2026, with every one of the Big Four major banks now forecasting a 25-basis-point increase at the 28–29 September Monetary Policy Board meeting.
Australian Broker reports that Commonwealth Bank (CBA), ANZ, Westpac and National Australia Bank (NAB) have converged on a September hike that would take the official cash rate to 4.60 per cent – its highest level since 2011. ANZ has gone further than its peers, also forecasting a follow-up 25-basis-point rise in November that would push the cash rate to 4.85 per cent, a level not seen since 2008.
ASX interbank futures priced in a 93 per cent probability of a September rate hike as of late last week, up sharply after the release of July's consumer price index data, which showed headline inflation at 3.5 per cent and underlying trimmed mean inflation at 3.6 per cent – both still well above the RBA's 2–3 per cent target band.
Why every major bank has shifted its call
Each of the Big Four has pointed to the same combination of pressures: rapidly rising oil prices tied to the ongoing Middle East conflict, increasingly hawkish statements from RBA leadership, and market pricing that has left the central bank little room to hold without undermining its inflation-fighting credibility.
CBA's head of Australian economics Belinda Allen said Brent crude oil was sitting above US$100 a barrel at the time of the bank's forecast revision. Higher diesel and petrol prices locally raise the risk of higher inflation in Australia both immediately and through second-round pass-through, Allen said. September moved from roughly 30 per cent priced before the July CPI print to around 90 per cent afterwards. Market pricing alone won't drive the board to hike, but it does raise the risk that its inflation-fighting credibility would be eroded if it did not hike, she said.
ANZ head of Australian economics Adam Boyton and senior rates strategist Jack Chambers argued that the escalation of the Middle East conflict – and the RBA's established tendency to treat oil price rises as inflationary rather than a drag on growth – made a single November hike no longer the most likely outcome. ANZ now expects a September rise followed by another in November, making it the first major bank to forecast back-to-back rises. That would see the cash rate reach 4.85 per cent, its highest since 2008.
Westpac chief economist Luci Ellis said the RBA's communications had clearly escalated over recent days, particularly after Governor Michele Bullock flagged publicly that upside risks to inflation appeared to be materialising. Westpac expects a September rise but has not added a second move to its base case, with Ellis noting the prospect remains live and much depends on the data flow after the meeting.
Ahead of the September meeting, both NAB and ANZ raised their fixed rates last week – a direct signal of where those banks expected the RBA to move.
What RBA Governor Bullock told Parliament
Speaking before Parliament's standing committee on economics on 18 September, Governor Bullock acknowledged that economic growth was slowing but said this had not been enough to bring inflation durably under control. Developments since the August meeting suggest that although growth in the Australian economy is slowing, some of these upside risks to inflation appear to be materialising, she said.
Bullock said businesses were passing input cost pressures from higher fuel prices through to customers across a range of goods and services. She pointed to the Middle East conflict, the global AI investment boom and extreme weather events as contributing to upward pressure on energy, agricultural and technology prices. Because of these capacity pressures and the Middle East conflict, inflation is likely to remain elevated for some time, she said.
Bullock acknowledged the pressure that higher borrowing costs were placing on mortgagors. I recognise that higher interest rates are difficult for Australians with mortgages who are also facing cost of living pressures, but reducing inflation is essential, she said.
The RBA will not consider cutting rates again until headline inflation is sustainably back within its 2–3 per cent target range. CBA expects the easing cycle to resume in 2027, though it has pushed the timing of that first cut later than previously forecast. As at 17 September, ASX interbank futures implied a roughly 82–86 per cent probability of a September move, with markets also pricing in further rises at November and December meetings. If all three were delivered, the cash rate would reach 5.10 per cent – a level not seen since 2008.
What borrowers should do before 29 September
For variable-rate mortgage holders, a September hike will increase monthly repayments once lenders pass the move on. This would be the fourth rate increase of 2026, following a cutting cycle that reversed in the first half of this year.
Finance Brokers Association of Australia (FBAA) chief executive Leo Gagic said the trajectory of rate changes reinforced the value of reviewing your lending arrangements proactively. Higher rates create challenges for borrowers, but also increase the demand for, and value of, professional mortgage guidance, Gagic said. Consumers are increasingly looking for guidance, not just transactions. Brokers who communicate regularly, explain market developments, provide clear insights, and help their clients understand options will build stronger and lasting relationships and loyalty.
Now is a practical moment to compare home loan rates across lenders and check whether your current rate remains competitive. Many borrowers who fixed or locked in during the previous cycle may be sitting on a rate that has widened substantially relative to what is available today. Even in a rising-rate environment, switching to a more competitive product can reduce the gap between what you pay and the current market.
Investors reviewing the cost of their lending portfolios should compare investor home loan options and consider whether restructuring debt makes sense given where rates are headed. Use our borrowing power calculator to model how a 25-basis-point increase affects what you can comfortably borrow and what it means for your repayment schedule.
The RBA's decision is expected to be announced on 29 September. Whether the board moves unanimously or with a split vote, the direction of policy is no longer in doubt. Borrowers who haven't reviewed their lending in the past six months would do well not to wait for the announcement before acting.