Mayank Bansal, CFA
Mayank Bansal is a CFA Charterholder and heads the Equity Research team at Kapitales Research, with over 5 years of experience analysing global equity markets. He leads fundamental, data-driven research combining rigorous financial analysis with macro trends.
Big Bank Shares Fall Ahead of Wednesday's CPI and the RBA's Next Rate Decision
Highlights
Introduction
Australia's big banks fell on Monday ahead of key inflation data on Wednesday and the Reserve Bank of Australia's next decision on Melbourne Cup Day.
The S&P/ASX 200 Financials index was down 1.08% at 9,617.2. The broader S&P/ASX 200 was down 0.29% at 8,769.8, so the banks were a clear drag on the market.
How the Big Banks Traded
Commonwealth Bank of Australia (ASX: CBA) was trading at AU$161.78, down 1.35%. Westpac Banking Corporation (ASX: WBC) was at AU$36.23, down 1.52%. ANZ Group Holdings Limited (ASX: ANZ) was down 1.47% at AU$39.45. National Australia Bank Limited (ASX: NAB) was at AU$40.78, down 1.28%. Macquarie Group Limited (ASX: MQG) held up better, down 0.60% at AU$245.57.
Where the Cash Rate Stands
The RBA's cash rate target is 4.60%, effective 30 September 2026. Every member of the Monetary Policy Board backed a quarter-point rise when it met on 29 September. In its statement, the Board said inflation was still too high and that some upside risks it had flagged in August were materialising. It pointed to a broader conflict in the Middle East, higher global energy prices and continued pressure on domestic capacity.
Policymakers have signalled they are prepared to tighten again if that is what it takes to bring inflation back inside the 2 to 3% target range. Their next announcement lands on 3 November 2026, at 2:30 PM Sydney time.
How Futures Are Pricing the RBA
The ASX publishes a daily RBA Rate Tracker based on ASX 30-day interbank cash rate futures. It converts futures prices into the implied probability of a change at the next meeting. Futures pricing points to a further increase being a real possibility on 3 November, but it is far from certain. Wednesday's inflation figures are likely to shift those odds in either direction.
Why Wednesday's CPI Matters
Fresh inflation figures for the three months to September arrive from the national statistician this Wednesday, 28 October. It will be the last major inflation reading before the RBA meets. A hot reading would make a further rise harder to avoid. A cooler print could take some heat out of that debate.
Why Rate Expectations Move Bank Shares
Dearer money can widen the gap banks earn between loans and deposits, yet it also squeezes households servicing mortgages. That can slow loan growth and increase the risk of bad debts.
Bank shares therefore tend to move quickly when rate expectations change.
Key Dates for Bank Shareholders
Conclusion
Australia's big banks fell on Monday ahead of this week's inflation data. With the cash rate at 4.60%, policymakers have not ruled out tightening again. Wednesday's CPI release will be the key test before the 3 November decision.
Note- All data presented is based on information available at the time of writing.
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