RBA Cash Rate Hike to 4.35% Tomorrow: 6 ASX Winners and Losers to Watch

RBA to Hike Cash Rate to 4.35%: ASX Stocks to Watch May 5

Published: Monday 4 May 2026 | RBA decision: Tuesday 5 May, 2:30 pm AEST

Australia’s Big Four banks are now in rare agreement. CBA, NAB, ANZ and Westpac all expect the Reserve Bank of Australia (RBA) to lift the cash rate by 25 basis points to 4.35% when it meets on Tuesday, May 5. The setup is tough: headline inflation jumped to 4.6% in March, well above the RBA’s 2-3% target. While news of a potential 30-day ceasefire proposal has offered some hope of easing oil prices, the situation remains on a knife-edge after a bulk carrier was attacked near the Strait of Hormuz on Sunday. The earlier fuel spike has already leaked into secondary costs like freight, food and services, making inflation stickier and giving the RBA little room to wait. With the cash rate already lifted from 3.60% to 4.10% through back-to-back hikes in February and March, this would be the third hike in four months. For investors, the question is no longer whether rates rise on Tuesday but how to position for what comes next.

What are the Best ASX Stocks to invest in right now?

Why All Four Big Banks See a Hike Coming

The case is straightforward. March CPI came in at 4.6%, a sharp jump from 3.7% in February, with fuel and energy costs doing most of the early damage and now passing through into broader prices. Trimmed mean inflation held at 3.3% year-on-year, still above target. Combined with unemployment at just 4.3% and wages still firm, the RBA has limited room to wait.

When all four major banks align, which is rare, the market should pay attention. The bigger question is how high this cycle goes. Westpac is currently the most hawkish of the Big Four, forecasting two further hikes in June and August that would push the cash rate to a 4.85% peak.

ASX Bank Winners Set to Gain From Wider Margins

Higher rates typically lift bank profits because lending rates rise faster than deposit rates, widening net interest margins.

Commonwealth Bank (ASX:CBA) looks best placed. Its dominant deposit franchise gives it the strongest leverage in a hiking cycle. It is also Australia’s largest home loan lender with over A$403bn in owner-occupier loans as of January 2026.

Westpac (ASX:WBC) and National Australia Bank (ASX:NAB) also stand to benefit, though to a lesser extent. ANZ (ASX:ANZ) tends to lag because its institutional book is more rate-neutral.

For small-cap exposure to the same theme, Bendigo and Adelaide Bank (ASX:BEN) and Bank of Queensland (ASX:BOQ) are worth a look. Their share prices have lagged the majors and may offer better value, but we believe the regionals carry more risk if mortgage stress rises. Roy Morgan projects mortgage stress could climb to 30.3% of holders if the May hike lands, matching the June 2024 peak. The market is watching regional bank bad debt provisions closely.

ASX Losers: REITs and Growth Tech Under Pressure

Higher rates hurt property trusts on two fronts: their valuations rely on future income discounted at higher rates, and their debt costs climb.

Goodman Group (ASX:GMG), Scentre Group (ASX:SCG) and Charter Hall (ASX:CHC) have all de-rated meaningfully through 2026 as the rate outlook shifted. High-growth tech names like Xero (ASX:XRO) and WiseTech Global (ASX:WTC) are also vulnerable, as their valuations rely on future earnings that look less attractive in a higher-rate world.

In our view, much of the bad news is already priced into REITs. The real risk is not Tuesday’s hike but the path to 4.85%, which Westpac sees by August. If that scenario plays out, further pressure looks likely.

The Investor’s Takeaway

Markets are pricing roughly an 86% probability of a 25 basis point hike on Tuesday. Our view is that investors should not trade the announcement itself but position for the trajectory.

If Westpac’s call of a 4.85% peak proves correct, defensive dividend payers like the major banks, utilities and gold producers should outperform rate-sensitive growth and property names for several quarters. A surprise hold remains possible and would trigger a relief rally in REITs and tech, but it is the lower-probability outcome.

For long-term investors, the practical takeaway is simple: tilt towards quality balance sheets and away from rate-sensitive growth.