Two of the big four banks are now predicting a fourth consecutive rate rise to start the year as the Reserve Bank of Australia (RBA) tries to fight rising inflation, caused in part by the war in the Middle East.
The RBA yesterday raised the cash rate by 25 basis points to 4.35 per cent for the third time, effectively unwinding last year's round of cuts.
Governor Michele Bullock acknowledged that Australians were "feeling poorer" but said the increase was necessary to give the central bank "space" to assess the global and domestic situation.
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Today, NAB updated its monetary policy forecast, and now predicts rates to be raised again to 4.60 per cent at the RBA's next meeting in June.
"The governor explicitly called the 'wait and watch' strategy the 'wrong term' in her press conference, and so it doesn't appear that the board thinks it has time on its side," the bank's economists Sally Auld and Gareth Spence wrote.
"This, together with the board's clear preference to prioritise the price stability aspect of its dual mandate given a broadly benign labour market forecast, suggests to us that the next rate rise will come in June."
Westpac had been predicting further rate rises before yesterday's hike, but believes it may not be until later this year.
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"We think the chance that they now hike rates in June is less than what we thought before, I mean, it was never a certainty but it was our base case," the bank's chief economist Luci Ellis said.
"But we still think that there are likely to be rate hikes from here, but perhaps pushed out a bit from what we previously thought."
The remaining big four banks, Commonwealth Bank and ANZ, are currently predicting a hold in June.
All four big banks passed on yesterday's rate rise onto their customers, which will take effect in the coming weeks.
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