The ANZ has become the second big bank in a week to forecast the Reserve Bank will turn hawkish and raise rates twice next year.

Key points: RBA can't keep real interest rates negative if growth and inflation picks up as expected argues ANZ

RBA can't keep real interest rates negative if growth and inflation picks up as expected argues ANZ Market already dramatically pulled forward expectations of a second hike in recent weeks, ahead of ANZ and NAB change

Market already dramatically pulled forward expectations of a second hike in recent weeks, ahead of ANZ and NAB change Two hikes would push mortgage serviceability back to recent peaks

The move follows the NAB change in call on the RBA last week of a two rate hikes next year, from an earlier call of no change.

The ANZ's change of view was driven by a more positive view on the domestic economy with both growth and inflation picking up, while it forecast the unemployment rate would fall to 5.3 per cent by the end of the year.

"In sum our outlook for 2018 is a touch more positive than before, reflecting a stronger outlook for non-mining business investment, the strength in public sector spending [not only in the infrastructure space] and a shallower dip in residential construction than previously expected," ANZ's head of Australian economics David Plank wrote in a note to clients.

The ANZ argues the real cash rate — the rate adjusted for inflation — was already negative and if economic growth accelerates and inflation picks up as expected, it will become even more negative and unnecessarily stimulatory.

"[The] RBA has progressively shifted to a hawkish outlook," Mr Plank said.

"Downside risks to growth and inflation have eased, suggesting less need for a negative cash rate."

It is a similar view over at the NAB where GDP expectations have been revised up, unemployment revised down and consequently inflation moves up as well.

NAB's head of global research Peter Jolly noted the most confident thing he could say about the bank's change in forecast was it would not be the last.

"The big deal here is that having been on a declining trend since 2011, for the first time, NAB is now saying we have seen a turning point for Australia's interest rate cycle," Mr Jolly said

The other big banks are staying put with their forecasts, with CBA pencilling one rise in the fourth quarter next year while Westpac says the RBA is hold right through 2018.

RBA call for 2018 Cash rate forecast at end of 2018 ANZ Two 25bp rises next year 2pc NAB Two 25bp rises in August and November 2pc CBA One 25bp rise in the fourth quarter 1.75pc Westpac No change 1.5

RBA overly optimistic: Westpac

Westpac chief economist Bill Evans says he does not share the optimism of either the other banks or the RBA about the economy.

"I think the RBA believes it will be raising rates next year," Mr Evans said.

"They are very optimistic on growth, they believe they will see strong income growth."

Mr Evans is convinced the RBA is wrong.

"Income growth is around 1.5 per cent, spending is around 2.5 per cent and that is at the expense of [household] savings.

"We are looking at a substantial drag from the construction sector which is a very job intensive activity."

Mr Evans said it looks like the labour market may be over-shooting and if softness continues in the services sector and retail, employment growth would roll over, causing a big problem for the RBA.

ANZ's David Plank concedes household consumption will remain relatively subdued, even if income growth picks up.

The bigger risk to his two-hike theory would be the on-going appreciation of the Australian dollar.

"A strong rally in the Australian dollar toward 90 cents, for instance, could be enough to defer a rate hike in 2018.

"Likewise, evidence that core inflation or wages are slowing again would rule out a rate hike in 2018."

The ANZ also rules a third hike next year due to the heavy indebtedness of Australian households, noting two rises would be enough to take the average mortgage repayment back to the previous peak of loan serviceability.

For its part, the market is already ahead of the ANZ and NAB's moves, with futures trading bringing forward its expectation dramatically in just the past couple of weeks.

Even last week, futures trading had only one hike priced in during the next 18 months, now it has two and the trajectory is getting steeper.