The Reserve Bank meets on 28 and 29 September, and the mood has shifted. As Australian Broker reported, all four major banks have aligned on a 25 basis point hike, which would take the official cash rate from 4.35% to 4.60%. Futures put the probability above 90% by the third week of September. ANZ is going further, tipping increases at both September and November.
The driver is inflation that won't quite behave. July headline CPI came in at 3.5% and trimmed mean at 3.6%, both still above the RBA's 2% to 3% target band. Governor Michele Bullock has flagged that some upside risks to inflation "appear to be materialising." The RBA has been clear it won't cut until inflation is back in the band.
What it changes for a business borrower
The commentary in the article is framed around mortgages and property, but the mechanics apply to any variable-rate commercial facility. A 25bp move lifts the reference rate, which flows through to variable business loans, overdrafts, lines of credit and much equipment and asset finance. If your facility is priced off a variable benchmark, expect the repayment maths to change on the next reset, not the announcement day.
This would be the RBA's fourth hike this year, on top of the June and August holds. The brokers quoted expect recalibration rather than retreat: buyers and investors adjusting budgets rather than exiting. For a business, the equivalent question is capacity. Every increase trims how much a lender will extend against the same cash flow, and highly leveraged borrowers feel it first.
Fixed-rate exposures are insulated until they roll. Variable exposures are not. If you have facilities resetting in the fourth quarter, this is a number worth modelling now, before the decision rather than after it. Nothing is delivered until the RBA delivers it, and forecasts have been wrong before.
General information only.