Commonwealth Bank warns of 40 basis point RBA rate hike on February 7 trends now Commonwealth Bank warns of a super-sized rate hike next week with inflation at 32-year high Commonwealth Bank fears 40 basis point rate hike Biggest lender said 25 per cent chance February 7 By Stephen Johnson, Economics Reporter For Daily Mail Australia Published: 02:23 GMT, 2 February 2023 | Updated: 02:26 GMT, 2 February 2023 Viewcomments The Commonwealth Bank is warning home borrowers to brace for a possible super-sized interest rate hike next week. Australia's biggest home lender fears the Reserve Bank would raise the cash rate by 0.4 percentage points on February 7 with inflation at a 32-year high of 7.8 per cent. This would take the RBA cash rate to a new 10-year high of 3.5 per cent. Gareth Aird, the Commonwealth Bank's head of Australian economics, said this possible 40 basis point increase would be the last in the Reserve Bank's monetary policy tightening cycle. 'We believe there is a non trivial risk the RBA raise the cash rate by a larger 40 basis points to 3.5 per cent and also announce an intention to hold the policy rate steady over the period ahead if economic developments evolve broadly in line with their updated forecasts,' he said. The Commonwealth Bank is warning home borrowers to brace for a possible super-sized interest rate hike next week (pictured is a bank branch) 'We believe if the RBA delivered an outsized hike of 40 basis points in February it would be coupled with a stated expectation from the board to keep the cash rate on hold over the period ahead while it assesses the impact of the cumulative rate increases.' Mr Aird described probability of a 0.4 percentage point increase as a 25 per cent chance. The Reserve Bank raised the cash rate by 0.5 percentage points in June, July, August and September before reverting to smaller 0.25 percentage point increases in October, November and December. Share or comment on this article: All rights reserved for this news site (dailymail) and under his responsibility