Banks flag imminent consecutive double rate rises

Commonwealth Bank and Westpac economists have predicted the Reserve Bank of Australia (RBA) to bump up official rates to 1.35% when it next meets in July; NAB and ANZ believe there will be another double hike in the next two months.

Quickly following the RBA's announcement, Westpac pushed the hike through, raising its variable home late rate by the full 50 basis points. To date, it's the only big four bank to react to the move.

RateCity research director Sally Tindall said: "This month's double hike is unfortunately just a taste of what's to come."

"The RBA wants to get the inflation genie back in the bottle and it's prepared to do what it takes to get the job done, and quickly."

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Mutual Limited chief investment officer Scott Rundell said the RBA had whipped out the 1-wood with its 50-basis point move. Rundell believed that the RBA had a noticeable change of tone, becoming more hawkish, finally recognising that inflation is a problem that needs tackling head on.

"The Reserve Bank will go hard again with future hikes if required and if the data warrants it. The weight of money amongst market watchers on the next move is 50 basis points in July, then another 25 basis points in August," Rundell said.

"There is possibility for more hikes given the board seems comfortable with the strength and resilience of the economy to stand on its own two feet without the still extraordinary monetary support in the system."

HSBC Global Research affirmed that the RBA has completely changed its game plan over the last two months.

The capital market research division suggested that the RBA had entered an inflation fighting mode and was likely to front-load more rate hikes.