Big four banks predict rate hike as inflation hits 3.8%

Australia’s "Big Four" banks are now unanimous in forecasting a 0.25% interest rate hike on Feb. 3, following a surge in headline inflation to 3.8%.

This acceleration, up from 3.4% in November, was driven largely by the expiration of government electricity rebates, which saw power prices soar by 21.5% over the past year.

The latest consumer price index data shows inflation has remained above the Reserve Bank’s 2–3% target for five consecutive months.

Beyond volatile energy costs, persistent pressures remain in holiday accommodation (+9.6%), housing (+5.5%), and services.

Treasurer Jim Chalmers noted that while temporary factor reversals played a role, "persistent pressures" in market services reflect a resilient private sector.

ANZ and Westpac joined CBA and NAB in predicting the February 3 move, though economists describe it as a single "insurance" hike rather than the start of a new cycle.

If implemented, the cash rate would rise to 3.85%, adding approximately $111 to monthly repayments on an average $694,000 mortgage.

Despite the looming hike, the ASX 200 remained flat, while the Australian dollar climbed above 70 US cents for the first time in three years.