Sydney, Jan 29, 2026, 16:46 (AEDT) — Market closed
- NAB shares ended the session up, outpacing Commonwealth Bank and Westpac.
- New inflation figures have shoved the Reserve Bank decision back to the forefront of traders’ focus
- Investors are tracking the trajectory of rate expectations closely, weighing the impact on bank margins and borrowers.
National Australia Bank Ltd (ASX:NAB) shares edged higher by 0.44%, closing at A$43.06 on Thursday. It stood out as one of the few gainers among Australia’s major banks. Commonwealth Bank dipped 1.13%, Westpac declined 0.95%, and ANZ inched up 0.11%.
That slight shift is significant as the narrative around interest rates gains momentum. The Australian Bureau of Statistics reported the consumer price index climbed 3.8% over the year ending December 2025, with the trimmed mean — which excludes extreme price changes — holding at 3.3%.
Economists are revising their forecasts ahead of the Reserve Bank of Australia’s Feb. 2-3 meeting. Westpac’s chief economist, Luci Ellis, suggested the RBA might be “one and done” if it hikes rates. ABC reported that all four major banks now expect a 0.25 percentage point increase; the cash rate target currently stands at 3.60%. ABC News
The broader market offered little support to banks. The S&P/ASX 200 slipped 0.07% to close at 8,927.50, ranging between 8,858.90 and 8,933.90 during the session.
NAB’s monthly business survey landed at the center of this week’s macro debate. It found business conditions firmed up in December, with sales and profits picking up. Chief economist Sally Auld described the results as “consistent with the view that momentum improved” in the economy during the fourth quarter. Reuters
When it comes to bank stocks like NAB, the trajectory of the cash rate directly impacts earnings forecasts. Higher rates may boost the net interest margin — the gap between loan income and deposit costs — but that gain often slips away quickly if funding expenses rise or deposit competition intensifies.
On the flip side, if borrowing costs remain elevated for an extended period, households and small businesses may tighten their belts. That could push bad debts higher, even if profit margins appear stronger on paper.
Friday’s session could hinge more on positioning than fresh headlines. Traders are focused on rate expectations, bond yields, and whether lenders are beginning to factor in a harsher cost-of-funds landscape.
All eyes turn to the RBA statement on Tuesday, Feb. 3, set for 2:30 p.m. AEDT. The central bank will either back up the market’s tightening talk or dismiss it outright.
