All four of Australia’s major banks are now warning another interest-rate increase is possible, after Westpac shifted position on Tuesday and set a 4.60% cash-rate target as its base case. Overnight trading was volatile, with cash-rate futures pricing a 60% chance of a 25-basis-point move by the Reserve Bank of Australia on September 29. The ASX rate tracker also moved to reflect a potential increase within three weeks. The shift follows inflation holding at 3.6% and economic growth coming in stronger than expected.

After Australia posted unexpectedly strong national accounts data, macro research firm TD Securities revised its rate outlook and said the Reserve Bank of Australia could raise rates by 25 basis points at its September meeting, taking the cash rate to 4.60%. The move would add A$92 a month to repayments on a typical A$600,000 mortgage, lifting this year’s total monthly increase to A$364. Investors are concerned stronger growth could intensify inflation pressures and force the central bank to tighten policy sooner than expected.

Australia’s September inflation data showed headline CPI eased from 3.8% to 3.5%, but the RBA-watched trimmed mean inflation held at 3.6%, above the 2%-3% target band. Housing and food prices were the main contributors. The Reserve Bank of Australia kept the cash rate unchanged at 4.35% this month, but Governor Michele Bullock said another hike later this year remains possible.

Australia’s federal budget changes to negative gearing and the capital gains tax indexing model have prompted a reassessment of housing investment returns. In Sydney and other markets, prices retreated in the weeks after the announcement, with some homes selling A$100,000 to A$300,000 below earlier appraisals. National home prices have fallen for three consecutive months, including a 0.3% month-on-month drop in June, the largest monthly decline so far this year. The shift has weighed on valuation assumptions for Australian listed property trusts (A-REITs) and added pressure to banks with mortgage-heavy exposure.