Sydney, January 29, 2026, 16:48 AEDT — The market has closed.
- Shares of Commonwealth Bank of Australia dropped 1.1% on Thursday, lagging behind other major banks in the session
- Stronger inflation figures have raised expectations of a February rate hike by the RBA
- Traders are focused on the RBA decision coming Feb. 3 and CBA’s earnings report due Feb. 11
Shares of Commonwealth Bank of Australia (CBA.AX) fell 1.13% to close at A$148.66 on Thursday, ending a two-day winning streak. The stock has now dropped 7.42% year-to-date. Volume hit roughly 1.39 million shares. The bank is set to report earnings on Feb. 11. (MarketScreener Australia)
The Reserve Bank of Australia is due to meet next week, and investors are increasingly betting on another rate hike. The bigger question now: will the move suggest further increases down the line?
That’s crucial for banks today since rates can swing both ways. While higher rates might boost net interest margins—the gap between earnings on loans and costs on deposits—they also raise mortgage stress and could trigger larger loan-loss charges.
Consumer prices climbed 3.8% in the year to December 2025, up from 3.4% in November, the latest inflation figures released Wednesday show. “The 3.8 per cent annual CPI inflation to December was up from 3.4 per cent to November,” said Michelle Marquardt, head of prices statistics at the ABS. (Australian Bureau of Statistics)
CBA economists say stronger-than-expected underlying inflation bolsters the argument for a 25 basis point hike in February — that’s a quarter of a percentage point. “The latest inflation data confirms that price pressures, while easing, are still too high,” said Belinda Allen, head of Australian economics at CBA. (CommBank)
Westpac chief economist Luci Ellis predicts the RBA will raise the cash rate to 3.85% in February, describing inflation as the “casting vote.” She hinted the moves after that might not be a clear series of hikes but rather a “wait-and-see” approach. (WestPaciq)
Rate wagers are extending past equities. On Thursday, the Australian dollar climbed to a new three-year peak, driven by expectations of an imminent RBA rate hike. (Reuters)
CBA faced a wave of customer frustration after a banking outage. The bank acknowledged that CommBank and NetBank were “unavailable for some customers” and said it was working “urgently” to resolve the problem. A spokesperson later confirmed the issue had been fixed. (The Nightly)
Big banks showed varied results today. Westpac slipped 0.95%, ANZ Group edged up 0.11%, and National Australia Bank added 0.44%. (MarketScreener)
CBA holders face a key risk: the rate story could shift fast. If inflation eases or the RBA turns more cautious, bank margin expectations could cool off. Yet borrowers would still grapple with higher repayments, and banks could see a rise in impairments.
Traders will be eyeing whether bank stocks continue to react to the inflation shock or fall back into range-trading in the next session. A sustained move in funding markets and bond yields would likely be taken as confirmation.
The next key event is the RBA’s policy decision set for Feb. 3, following its Feb. 2–3 meeting. The cash rate stands at 3.60%. (Gov)
