ANZ and NAB are both predicting the Reserve Bank will raise rates twice next year.

The ANZ says it has improved its view on the domestic economy with both growth and inflation picking up, and now predicts the unemployment rate will fall to 5.3 per cent by the end of 2017.

“In sum our outlook for 2018 is a touch more positive than before, reflecting a stronger outlook for non-mining business investment, the strength in public sector spending [not only in the infrastructure space] and a shallower dip in residential construction than previously expected,” ANZ's head of Australian economics David Plank wrote in a note to clients this week.

The prediction follows NAB’s change in prediction for the RBA last week, suggesting there will be two rate hikes next year, from an earlier call of no change.

“The big deal here is that having been on a declining trend since 2011, for the first time, NAB is now saying we have seen a turning point for Australia's interest rate cycle,” NAB's head of global research Peter Jolly noted.

The ANZ believes the real cash rate — adjusted for inflation — is already negative.

It says that if economic growth and inflation picks up as expected, it will become unnecessarily stimulatory.

“[The] RBA has progressively shifted to a hawkish outlook,” Mr Plank said.

“Downside risks to growth and inflation have eased, suggesting less need for a negative cash rate.”

The CBA has forecast one rise in the fourth quarter next year, while Westpac predicts the RBA will leave the cash rate on hold right through 2018.