Diverging rate views meet at a Crossroads

• Across the domestic banking space in Australia there have been contrasting views on the future of the RBA’s decision in 2026.  Westpac remains the most cautious, revising its outlook to an extended hold through 2026, viewing recent inflation surprises as largely temporary rather than structural

• NAB has turned more hawkish, seeing the economy ending 2025 in stronger shape and calling for 25bp hikes in February and May, arguing risks to growth and inflation warrant a modest policy recalibration in H1 2026.

• CBA has shifted higher but remains more restrained, now expecting a single 25bp hike in February 2026 to 3.85%, with a follow-up move possible later in the year but not its base case.

• In the US, Fed Governor Waller struck a dovish note, arguing rates are 50–100bp above neutral and should be lowered at a measured pace next year, as markets now turn to upcoming US CPI data for further direction.