National Australia Bank became the first big bank to raise its fixed mortgage rates after the Reserve Bank’s May cash rate rise, lifting its one- and two-year fixed rates by 0.15 percentage points today. The bank’s lowest fixed rate now sits at 6.49 per cent.

The move landed just as economists were already leaning toward a pause from the Reserve Bank of Australia at its June meeting. All four of the big banks now expect the cash rate to stay at 4.35 per cent next month, but NAB has shifted its own forecast and now sees one final hike in August rather than June.

That makes NAB’s pricing a small but useful sign of where lenders think the cycle may be heading. Sally Tindall said fixed rates are often a window into what banks think comes next, and that NAB’s decision to lift its short-term fixed rates suggests it is not ready to rule out more rate rises even though the RBA will almost certainly hold next month.

The latest inflation figures help explain why the debate is still alive. Headline inflation fell in April to 4.2 per cent from 4.6 per cent, but trimmed mean inflation, which strips out volatile items, accelerated to 3.4 per cent from 3.3 per cent. That split has left policymakers and economists reading the same data in different ways.

Luci Ellis said underlying inflation was still too high and argued the RBA would look beneath the headline numbers before making its next call. She said the central bank understands the subtleties of Australia’s economic data and has the resources to examine them properly, but will not jump to rash conclusions based on one month’s figures. At the same time, she said it would want to take a pause to assess how dominant and lasting those below-the-surface trends are.

The divide among the big banks remains sharp. Commonwealth Bank and ANZ think the rate-hiking cycle is already over, while Westpac economists expect two further increases in August and September that would take the cash rate to 4.85 per cent. NAB is closer to that camp than it was before, and its latest move suggests lenders are still not convinced the RBA is finished.

For borrowers, the immediate message is that the pressure has not fully eased. The June meeting may bring no change, but pricing from one of the country’s biggest lenders shows the market is still preparing for the possibility that the next move is up, not down.