Suddenly the idea of a Melbourne Cup Day interest rate cut has become less far fetched.
Financial markets have been quick to factor in a greater than 50-50 chance of the Reserve Bank cutting the cash rate after an unexpectedly benign set of inflation figures on Wednesday.
There has been speculation that the central bank would cut the rate to a record low of 1.75 per cent to counter the recent increases by the big four retail banks.
The cash rate has been at two per cent since May.
Prime Minister Malcolm Turnbull claimed the big banks had "overdone it" with their round of independent mortgage rate increases.
For example, the 0.2 percentage point increase by Westpac was double what was needed to cover the cost of new capital requirements, he says.
Other banks raised their rates by 0.15 to 0.18 percentage points.
"The increase they are making is higher than is justified by the additional capital they are being required to hold," Mr Turnbull told Adelaide's 5AA radio on Wednesday.
Their decisions came shortly before the National Australia Bank announced on Wednesday its annual profit jumped 20 per cent to $6.34 billion.
The September quarter inflation figures would also suggest rate increases are out of line with economic circumstances.
The CPI rose just 0.5 per cent in the September quarter to keep the annual rate at 1.5 per cent and well below the RBA's two to three per cent inflation target.
Importantly, annual underlying inflation measures - which remove volatile price changes and are the RBA's preferred indicator when considering changes to interest rates - eased to an average 2.15 per cent when it was expected to be 2.5 per cent and the middle of the target zone.
ANZ economists Jo Masters and Katie Hill have been expecting a cut from the central bank early next year as the housing market slows.
"But today's CPI data increases the chance of an earlier than expected move," they said.
JP Morgan chief economist Stephen Walters is sticking with his call that the cash rate will remain steady on Tuesday, but concedes the decision now is "finely balanced".
"Moreover, the chances of a rate cut before year end have risen materially," he says.
