The Commonwealth Bank of Australia (CBA) and the National Australia Bank (NAB) have both adjusted their expectations, now anticipating a cash rate increase. This shift could occur as soon as February, with NAB suggesting another potential rise in May.

Contrastingly, some financial institutions are offering a more optimistic outlook. They forecast that the cash rate will remain steady, avoiding any hikes in the near term.

Westpac has revised its own cash rate forecast, projecting that the Reserve Bank of Australia (RBA) will maintain the cash rate at 3.60 percent indefinitely. This marks a change from Westpac’s earlier prediction, which anticipated two additional cuts in May and August next year, according to financial comparison site Canstar.

Nevertheless, Westpac indicates that while they expect stability for now, they remain open to the possibility of cash rate changes in the first half of 2027.

Previously Westpac’s economic team was predicting two further cash rate cuts in May and August next year, Canstar says.

However, the bank is leaving the door open to this possibility in the first half of 2027.

The shift comes on the back of recent inflation surprises and the RBA’s “more hawkish tone,” Canstar says

ANZ still expects the cash rate to remain unchanged in 2026.

When it comes to savings, there’s slightly better news

Canstar says 33 banks have hiked at least one term deposit rate so far this month.

This list includes CBA, NAB, ANZ and Westpac, which changed its term deposit special from 3.90 per cent for 11 months to 4.10 per cent for 12 months.

This compares to just 10 banks that cut at least one term deposit rate so far this month.

As a result, out of the big four banks, ANZ has the highest term deposit rate of 4.25 per cent, although it’s only for a term of eight months.

Sally Tindall, Canstar.com.au data insights director, said: “Westpac’s the last big bank to rule out the possibility of further cash rate cuts on the back of what has been a marked shift in tone from the RBA.

“The central bank has gone out of its way to put borrowers on notice that cash rate cuts are well and truly out the window, but also, hikes are now back on the table.

“While this news is a bitter pill to swallow for borrowers lugging around Santa sacks full of debt, anyone with money in the bank could start to feel a tailwind instead of a headwind in 2026 if the cash rate starts to rise.”