Interest rates could peak at an 18-year high in a matter of months, according to modelling from one of Australia's biggest banks.

Westpac, citing the continuing war in the Middle East and high oil prices, is now forecasting mortgage holders will be hit by three more rate hikes – in May, June and August – after already having two to start 2026.

That is two more cash rate increases than previously predicted.

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Interest rates have already risen from 3.60 per cent at the end of 2025 to 4.15 per cent, but with three more hikes they would hit 4.85 per cent in August – a level that hasn't been reached since late 2008.

Westpac chief economist Luci Ellis said even government measures like halving the fuel excise, announced today, may not halt the inevitable.

"This shift reflects the longer disruption to and slower recovery in fuel supply assumed… with the Strait of Hormuz essentially closed for eight weeks and traffic recovering only slowly after that," she said.

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"It also reflects the surprisingly rapid pass-through of higher fuel and other oil-derived product prices into other prices in Australia.

She said she felt the Reserve Bank of Australia (RBA) would have no choice but to pass on the pressure to millions of Australians in the form of a rate rise.

She said the fuel excise would reduce the short-term outlook for headline inflation, but she still said it was likely to peak at 5.4 per cent.

Inflation currently sits at 3.7 per cent, although the latest figures are for February and therefore don't take into account the economic shock caused by the Middle East conflict.

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"The (fuel excise) announcement also does not affect prices of other oil-related products, including aviation fuel and various plastics, or any price increases from damage to gas and other production facilities in non-combatant Gulf states," Ellis said.

She also said the cash rate rising could lead to higher unemployment, up to five per cent, and that Australia's economic growth would most likely slow.

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Prime Minister Christopher Luxon said the Government would be ‘more assertive’.

The victim described Jordan Tegus as ‘an evil, rotten person, without a heart and soul’.

The move is expected to reduce the price of fuel for Australians by 26.3 cents a litre.

Pro-cash advocates are calling on the federal government to expand the cash mandate to big businesses including Bunnings, McDonald's and Kmart to protect its future.

Under new cash rules, most retailers that sell fuel and groceries must accept cash payments for in-person purchases of $500 or less between the hours of 7am and 9pm.

However cash supporters, including Cash Welcome founder Jason Bryce, want to see more businesses included in the mandate to guarantee the future of cash for those who rely on it.

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Small businesses with an annual turnover below $10 million are exempt from the new cash mandate, unless they share a trademark with a larger retailer.

In Australia, there were previously no laws to stop businesses from refusing to accept cash.

According to the Reserve Bank of Australia, businesses have been able to choose whether to accept cash or card payments, or both.

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The cash mandate will be reviewed by the government after three years to ensure it is functioning as intended.

Bryce told supporters of Cash Welcome today the mandate could easily apply to all large retailers "at the very least".

"Ideally we want all retailers to be accepting cash," he said in his latest newsletter.

"The costs of distributing cash needs to be shared by the big merchants so banks, consumers and small business don't end up paying all the costs.

"The best thing that could happen for small businesses who like to accept cash is that big businesses all support the cash system.

"Big business, utilities and government agencies have escaped from this proposed cash mandate scot-free with no obligation to accept cash and support the cash system.

"Large brands like Bunnings, McDonalds, KFC, Kmart, Big W, AGL, Tyrepower, Telstra, Optus need to be captured by this cash mandate."

One Nation senator Malcolm Roberts has launched a motion to overturn the new cash rules, claiming the laws are a "back-handed" attempt to phase out the use of cash.

The sentate is set to vote on the motion tomorrow.

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