The Commonwealth Bank of Australia (CBA) has reaffirmed its forecast for an interest rate increase in February, stating that a recent moderation in wage growth is insufficient to change the Reserve Bank of Australia's (RBA) course.
Wage Growth Dips But Hike Remains on the Cards
According to the bank's latest Wage and Labour Insights report, annual wage growth eased to 3.1 per cent in November, down from 3.2 per cent the previous month. Despite this softening, CBA economists believe it will not deter the central bank from further tightening monetary policy.
'We continue to see a February 2026 rate hike as the most likely scenario,' the report stated. 'Thereafter, we expect the cash rate to remain on hold at 3.85 per cent.'
Immediate Impact on Mortgage Holders
Analysis by financial comparison site Canstar illustrates the tangible impact such a move would have on household budgets. A 0.25 percentage point increase would swiftly translate into higher monthly repayments for variable-rate borrowers.
- Repayments on a $600,000 mortgage would rise by roughly $90 per month.
- Borrowers with a $750,000 loan would face an increase of around $112.
- Those with a $1 million mortgage would see their repayments climb by approximately $150 each month.
Inflation Data Holds the Key
Belinda Allen, CBA's head of Australian economics, emphasised that the bank's prediction is heavily contingent on upcoming inflation figures. 'A lot was dependent on the outcome of the Q4 25 CPI data due on January 28,' she noted.
While headline inflation showed signs of easing in November, falling to 3.4 per cent from 3.8 per cent, underlying pressures remain. Canstar pointed out that trimmed mean inflation has persisted at or above three per cent for five consecutive months.
'Inflation is now moving back in the right direction,' Canstar observed. 'That's a small win for the RBA, but the reality is... the current cash rate setting might not be high enough to bring inflation back down to its target of 2.5 per cent.'
Borrowers Urged to Prepare Now
With the possibility of a rate hike still very much alive, financial experts are advising borrowers to take proactive steps. If the RBA acts in February and banks pass on the increase in full, higher repayments would flow through to variable-rate borrowers in the following weeks.
'The possibility of a rate hike is still very much a live one and borrowers should take the time to get ahead of the game while they can,' the analysis concluded. 'Work out what your repayments would look like if the cash rate rises and make sure your budget can handle it.'
