# Australian inflation and interest rate outlook > Live situation record from CLSTR: https://clstr.news/situations/australian-inflation-and-interest-rate-outlook > Updated: 2026-09-11T04:14:57.000Z. Sources: 19. Developments: 4. Following higher-than-expected July inflation data in Australia, major financial institutions revised their interest rate forecasts. While the Reserve Bank of Australia (RBA) held rates steady in August, banks such as NAB, Commonwealth Bank, and ANZ provided varying predictions for the timing of future hikes, ranging from September to November. By September, RBA Deputy Governor Andrew Hauser warned that inflation remains too high and cannot stay above target for an extended period. He identified the Middle East conflict, artificial intelligence-driven economic shifts, and supply potential weaknesses as primary inflationary drivers. With the cash rate at 4.35%, analysts suggest further hikes may be required to return inflation to the 2-3% target band, a goal not anticipated until mid-2026. As of September 2026, Hauser noted that the public is “furious” about inflation remaining above the target band for an extended period. While the cash rate remains at 4.35%, economists remain divided on the timing of subsequent increases. Some analysts predict a rate hike as early as September 29, while others expect moves later in the year as the RBA continues to assess global trends, including Middle East instability and AI-driven economic booms. In mid-September 2026, Citi revised its forecasts, predicting back-to-back 25 basis-point increases in September and November. The bank raised its terminal rate forecast from 4.6% to 4.85%, delaying expectations for the first rate cut until the fourth quarter of 2027. Senior economist Faraz Syed cited a “two-speed economy” where an AI-related investment boom offsets a housing correction, alongside tight labor markets and elevated oil prices. Finance commentator Alan Kohler warned that a September hike could push Australia’s fragile economy into a recession. Concurrently, the banking sector is adjusting to the RBA's policy shifts, which saw the cash rate rise from 3.6% to 4.35% between February and May 2026. ## Claims - Bank of England Governor Andrew Bailey identified energy prices as a primary upside risk to inflation. (corroborated by 5 sources) - The Reserve Bank of Australia may need to raise interest rates if inflation remains above target. (corroborated by 3 sources) - Andrew Bailey stated that the United Kingdom economy is not currently on the verge of a recession. (corroborated by 2 sources) - MPC member Megan Greene advocated for preemptive rate hikes to manage energy price volatility risks. (corroborated by 2 sources) - RBA Deputy Governor Andrew Hauser noted public frustration regarding high inflation levels in Australia. (corroborated by 2 sources) - Economist Ric Deverell predicts an RBA rate hike on September 29. (corroborated by 2 sources) - The Australian cash rate currently sits at 4.35%. (corroborated by 2 sources) - The Bank of England has maintained the Bank Rate at 3.75%. (single source) ## Timeline ### 2026-09-11: Australian banks adjust rates amid RBA monetary policy shifts Australian banks are adjusting rates amid RBA policy shifts, with Commonwealth Bank raising its 12-month term deposit rate to 5.20% p.a. as businesses face higher borrowing costs. 2 sources. https://clstr.news/cluster/australian-banks-adjust-rates-amid-rba-monetary-policy-shifts ### 2026-09-10: Citi forecasts further Australian interest rate hikes Citi predicts two 25-basis-point interest rate hikes for Australia in late 2024, raising its terminal rate forecast to 4.85 per cent amid persistent inflation and recession fears. 2 sources. https://clstr.news/cluster/citi-forecasts-further-australian-interest-rate-hikes ### 2026-09-08: Central banks in UK and Australia weigh rate hikes amid inflation risks Central banks in the UK and Australia face rising inflation risks from energy prices, with policymakers debating whether to implement further interest rate hikes to stabilize their economies. 11 sources. https://clstr.news/cluster/bank-of-england-officials-divided-over-interest-rate-response-to-energy-shocks ### 2026-08-26: Australia banks revise rate hike forecasts following inflation Major Australian banks have revised interest rate forecasts following higher-than-expected July inflation, with predictions for hikes ranging from September to November. 10 sources. https://clstr.news/cluster/housing-costs-drive-australian-inflation-and-rba-rate-outlook --- Cite as: Australian inflation and interest rate outlook. CLSTR, https://clstr.news/situations/australian-inflation-and-interest-rate-outlook