As all the big four banks have now increased lending rates, some economists say it could prompt the the central bank to consider a rate cut as soon as next month to offset the effect on households. Because the rate increases announced so far amount to less than 0.25 percentage points the Reserve Bank board will have to decide whether to cut by its usual increment of 0.25 points and overcompensate or whether not to cut and to allow the increases in retail rates to stand. The board next meets on November 3, Melbourne Cup day. AMP chief economist Shane Oliver said the banks' moves would add to pressure on the Reserve to lower official interest rates, in the hope that a reduction would be passed on to borrowers. This would limit the effects of the commercial banks' rate rises on consumer confidence and spending.

But Dr Oliver conceded the Reserve Bank may be concerned that a further cut in official rates could reignite activity in the housing market, raising risks to the economy. "While the RBA looks like it doesn't want to have to cut interest rates again, it won't want to see households with a mortgage paying higher rates just now either, given the risk this will pose to consumer spending at a time when economic growth is still weak," he said. Dr Oliver is one of several economists forecasting an official rate cut next month. Financial markets, however, still put the odds at about 30 per cent. This is slightly lower than it was a week ago. Like rivals Commonwealth Bank, which raised interest rates on Thursday, and Westpac last week, ANZ and NAB blamed their increases on policies requiring major banks to hold larger equity capital buffers, which make banks more resilient to shocks. The lenders argue they are passing on this cost to customers, saying shareholders should not wear all the costs of a safer banking system.

But Wayne Byres, the chairman of the Australian Prudential Regulation Authority, on Friday told a parliamentary committee that corporate finance theory suggested that as banks become – through higher equity buffers – shareholders should "require marginally less return". But Mr Byres added, "how all that plays through, we will have to see, and that is why everyone is watching this very keenly". Treasurer Scott Morrison said banks' interest rate moves were "commercial decisions", but also highlighted the "handsome" returns banks make. "They do receive a handsome return on their equity, our banks, that's a good thing, haven't got an issue with that," Mr Morrison said. "We want our banks to be strong but equally businesses across the country have changes to their cost base all the time." For a customer with a $300,000 mortgage, the moves by ANZ and NAB will increase the monthly repayments by about $30.