Australia’s major banks expect the Reserve Bank of Australia (RBA) to raise interest rates by 25 basis points next week, as persistent inflation and surging oil prices increase pressure on the central bank. The move would signal that the RBA is prioritising inflation control despite slowing economic growth and potential damage to employment and household finances.

Markets anticipate the cash rate rising to 4.6 per cent next week, with a further increase to 4.85 per cent early next year and a possible rate above 5 per cent by mid-year—the highest since 2008. Brent crude is above US$104 a barrel, while Commonwealth Bank has warned it could reach US$150 as inventories fall; higher fuel costs could quickly raise transport, airfare and food prices, worsening the cost-of-living squeeze.