Commonwealth Bank boss says Reserve Bank rate hikes probably finished

The chief executive of Australia's largest bank, Matt Comyn, says CBA believes the Reserve Bank has finished hiking interest rates for now, but the board's November meeting is "live" and another rise remains a possibility.

Speaking with the ABC's Alan Kohler, the Commonwealth Bank chief executive said the next movement of the RBA would depend on the quarterly inflation data released at the end of the month.

"We believe that's the last [rate rise], but certainly I think the last meeting of this calendar year is live," he said.

"We see and feel … the impact of higher rates. We feel that customers obviously are feeling the increasing burden from higher rates.

Mr Comyn said the September hike was needed due to rising inflationary pressures from global forces such as the Middle East conflict and fuel price rises.

He said cost-of-living pressures were affecting different cohorts of CBA customers in different ways.

"We're seeing … where people are exposed particularly to higher borrowing costs and higher mortgages, a reduction in spending in some instances, [a] reduction in terms of savings," he said.

"I think households are feeling the pressure. We saw an increase in, for example, the proportion of customers that are requiring financial assistance or struggling to meet repayments.

"There are some subsectors, let's say in business, which are starting to feel the pressure of less consumer and household demand and expenditure."

Comyn says housing will bounce back

But there have been pockets of hope, with the bank seeing a 13 per cent growth in business lending across the 2026 financial year.

Doubtful debts were also still low and "well below where you would expect the average to be", mostly because unemployment was still low, he said.

Housing is also an area of optimism, with Mr Comyn predicting Australia's tanking property prices will bounce back.

He recalled that when interest rates last peaked in 2023, house prices fell nationally by 8.2 per cent, and compared it to current predictions of an estimated 10 per cent drop.

"I seem to remember considerably less focus on house prices during that time. But yes, I do think house prices will weaken over the course of this year," he said.

Consequently, he said, if interest rates reduced through next year as expected, property prices would pick up again in line with rising demand that was also bolstered by a "structural undersupply of housing".

"Housing is a very important asset in Australia. I think it's 57 per cent of household wealth in the country," he said.

"The biggest issue over the long term is our inability to grow productivity in terms of the production of housing."

Reduce regulation to grow the pie

Mr Comyn added his voice to calls for Australia to boost its productivity, saying a rate of 3 per cent compared to 2 per cent made "a really big difference".

"Productivity is what enables you to earn on an ongoing basis the income to be able to support improvement in in living standards," he said.

He said this was achieved through housing, low-cost energy, skills, migration and technological advancements including AI.

"We need to make it easier for small businesses or new businesses to be created that are successful and productive. And I think that's very hard in the current context," he said.

"Where I would be focusing on most is all on the supply-side reform. How do we reduce layers of approvals? How do we reduce layers of, in some areas, regulation? How do we accelerate a number of those processes.

"It's much easier to distribute a growing pie than one that isn't."

The federation is a bad business

Mr Comyn said fragmentation across both the Commonwealth and the states was particularly problematic in the context of regulation.

"It's the same inside a company; you're often adding an extra control, an extra process," he said.

"It's much harder to actually look at the totality and work out whether there's complete coherence, if there's anything there that's waste.

"If the federation was a company, I don't think you'd invest in it."

Mr Comyn said there were examples where the states were working very constructively with the Commonwealth but said there needed to be "real urgency across a number of these topics".

The banking boss said worried about the federal government running deficits "particularly at this point in time".

"Typically over a decade, there's times when the economic conditions are better and you should be able to run a surplus," he said.

"You're then creating fiscal capacity and degrees of freedom for some form of exogenous shock

"We're seeing a big increase in fiscal deficits around the world. I think this is reducing degrees of freedom. 

"This puts a lot of pressure on future generations in particular."

More volatility the new norm

Like RBA governor Michele Bullock, Mr Comyn said he had also noticed frequent and potentially larger volatility.

"So for these shocks, we have a number of structural challenges as well, including demographics, how we actually deliver the services that Australians expect today and reasonably demand for the future," he said.

Mr Comyn also weighed in on defence spending, saying he supported raising how much the country allocated.

"There's no question we're in a different geopolitical and national security environment,"

he said.

"We've got to be able to pay for that. Obviously, we need to spend that well. But I find it challenging looking at all of the budget papers and documents and trying to work out how to chart that course. And those trade-offs are not easy to achieve now."