Three Big Four Banks Flip to RBA Hikes, AUD/JPY Targets 115
Three Big Four banks reversed their RBA calls this week after CPI and spending data surprised. AUD/JPY targets 115 as BoJ's Himino offered no new timing signal.
Three of Australia's Big Four banks now expect another RBA hike this year after minutes, CPI, and household spending data all pointed the same direction this week. AUD/JPY is pressing toward 115 while a BoJ hike-timing update offered the yen little fresh ammunition.
NAB took the most aggressive position, forecasting a September hike to 4.60% on the view that July inflation ran hotter than the RBA itself had anticipated. CBA revised its call Thursday to a November hike to 4.60%, saying the broad-based upside CPI surprise "has crossed the threshold needed to trigger further tightening," while acknowledging a material risk the board could act as early as September. ANZ also moved to a November hike, with Australian economics head Adam Boyton saying inflation risks are "closer to crystallising," a phrase that echoes the RBA's own August minutes.
Westpac is the lone holdout among the Big Four, maintaining its call for rates to stay at 4.35% through year-end. Its argument is that July CPI was "noisy rather than a genuine signal of reacceleration," with softer labour-market and wage data still providing enough offset to keep the RBA on hold.
The shift extends beyond domestic banks. Goldman Sachs joined the November-hike camp. Citi's Josh Williamson expects the cash rate to reach 4.60% this year and sees risks tilted toward still more tightening. UBS's Stephen Wu also favors November over September, but his distinction is important: an immediate September hike would suggest the RBA believes it is "behind the curve," potentially raising the risk that one additional move would not be enough.
Markets have repriced in parallel. September hike odds jumped from roughly 17% before CPI to as high as 50%, with around 30bp of additional tightening now priced by February 2027.
Tuesday's RBA minutes showed policymakers had already debated pre-emptive tightening, saying monthly inflation and labour-market reports would help determine whether upside risks were crystallising before the Sept. 28–29 meeting. Then came July CPI. Headline inflation slowed to 3.5% from 3.8% but beat the 3.2% consensus. Trimmed mean CPI held at 3.6%, above the 3.5% expected, while the monthly pace accelerated to 0.5%. Services inflation also picked up to 3.7% from 3.5%, making the underlying composition less reassuring than the headline decline suggested.
Thursday added a demand-side confirmation. Household spending rose 1.1% month on month, lifting annual growth to 7.0%. Discretionary spending accelerated to 7.8% and services spending to 6.8%. Price effects contributed to nominal strength, but the broader message is still that households are not retrenching sharply.
Deputy Governor Ryozo Himino's speech should have been yen-positive on substance. He said the Bank of Japan should "continue to raise the policy interest rate" and warned of the possibility that underlying inflation exceeds 2%. Yet little of that represented fresh guidance. He gave no new timing signal and largely reiterated the BoJ's existing normalization framework. Markets treated the speech as confirmation rather than a reason to reprice Japan aggressively. That leaves AUD/JPY driven by the side where expectations are actually changing: Australia.
AUD/JPY is closing in on 114.91, with the daily MACD breaking its descending trendline and reinforcing the view that a correction from the previous high completed at 109.25 in three waves. A firm break of 114.91 would resume the broader rise from 86.03 and target the 38.2% projection of the 86.03-to-114.91 move from 109.25 at 120.28. Near-term conditions are stretched, with the 4H RSI above 70. A break below 113.41 would point to temporary consolidation. The 55-day EMA near 112.78 marks key support for the bullish outlook.
The AUD/JPY rally this week is about a change in information, not simply relative central-bank rhetoric. Australia has delivered three consecutive reasons to reconsider where RBA rates are headed, and three of the Big Four banks have now done exactly that.
RBA (RB GLOBAL INC.) carries an Alpha Score of 37, labelled Mixed, on the AlphaScala industrials page.
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