Fresh insights reveal that the Commonwealth Bank is preparing for additional interest rate hikes, despite publicly predicting only a single forthcoming increase as it continues to tackle inflationary pressures.
Research by Bheja Home Loans indicates the bank’s fixed-rate pricing suggests an anticipation of two more hikes in the Reserve Bank of Australia’s (RBA) cash rate, contrasting with its economists’ public expectation of just one more rise in May.
According to Bheja’s CEO, Pravin Mahajan, the Commonwealth Bank preemptively raised its three-year fixed interest rate for owner-occupier loans by 0.7 percentage points to 6.04 percent ahead of the RBA’s February cash rate announcement. This represents the most significant 30-day increase observed in a single product by any Australian lender.
Despite the official stance of CBA economists, who foresee the cash rate reaching 4.1 percent by May, Mahajan points out that the bank’s pricing patterns suggest otherwise.
“The adjustment effectively anticipates three consecutive 0.25 percent hikes by the RBA,” Mahajan explained.
“CBA acted even before the RBA declared the first increase – their pricing indicates expectations of at least two more hikes,” he added.
With meetings scheduled for March 17 and May 5, multiple rises could arrive rapidly.
After the latest February rate hike, two further 0.25 percentage-point increases would leave a homeowner with a $750,000 mortgage paying about $360 more per month.
Revealing data shows Commonwealth Bank is bracing for triple rate hikes, despite forecasts of only one RBA increase in May
Canstar data insights director Sally Tindall said the fixed‑rate tide is on the way up
Any further rate rises will add fresh pressure to households already dealing with elevated repayments.
Required mortgage payments as a share of household income are now above the historical average, according to the RBA Board’s minutes, even as households funnel extra funds into offset and redraw accounts.
In the RBA’s updated forecasts, core inflation was forecast to remain above three per cent for all of 2026.
‘This is too high and will not be tolerated by the RBA,’ CBA head of Australian economics Belinda Allen said.
‘But it remains a line-ball decision and is dependent on the data flow from here.’
Treasurer Jim Chalmers said the government was doing its part to ease living costs by cutting taxes and making medicines cheaper, but rejected suggestions higher public spending was contributing to inflation.
Dr Chalmers’ mid-year budget update, delivered in December, showed government expenditure was expected to rise to 26.9 per cent of GDP this financial year – the highest level in decades, excluding the pandemic.
But he was quick to point out the RBA board, in its post-meeting statement, singled out surprisingly strong private demand as a driver of inflation and made no mention of higher government spending.
‘What’s happened over the last six months or so is that private demand has turned out to be much stronger than we had been forecasting,’ governor Michele Bullock said in her post-meeting press conference.
Ms Bullock attributed much of the blame to Australia’s dire productivity growth, which meant the economy could not sustain a higher level of growth without price pressures kicking off.
Deloitte Access Economics partner Stephen Smith said the blame for that extended beyond the current government.
‘The fact that an economy growing at 2.3 per cent breaks out in inflation sweats points to a more fundamental problem in our economy – our poor capacity to produce goods and services and our low run rate,’ Mr Smith said.
‘That we are here is an indictment on the piecemeal and lacklustre nature of reform over the last three decades.’
The result is lower forecast growth in household disposable income – essentially, living standards.
‘This is not ambition for Australia,’ Mr Smith said.
‘If this is really as good as it gets for economic growth, then Australia has bigger problems than an interest rate rise.’
The hike would increase pressure on the government to deliver reforms allowing the economy to expand without adding to inflationary pressures, he said.
Dr Chalmers said the government needed to better address intergenerational inequity, but his focus was on increasing housing supply and previously announced changes like reducing superannuation tax concessions.
‘Any further changes to taxes, beyond those which we’ve already flagged, would be a matter for cabinet in the usual way, and would be consistent with the reform directions that we set out after the reform roundtable a few months ago,’ he told reporters.
Canstar data insights director Sally Tindall said fixed interest rates are beginning to rise again.
‘It’s a big change from last year when the bank was offering up a 2-year special at 4.99 per cent,’ she said.
‘While the majority of borrowers are on variable rates, anyone who was considering fixing may feel like they’ve missed the boat.’
