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RBA Watch

RBA Watch

RBA to lift rates to 3.0% by early-2023

The Reserve Bank of Australia will probably hike its cash rate by another 25bp at its meeting on 7th June, but we expect it to accelerate its hiking cycle with a 40bp hike in August following the release of stronger-than expected inflation data. Our forecast that interest rates will peak at 3.0% is above the analyst consensus.

31 May 2022

RBA Watch

RBA to hike aggressively as inflation surges

The surge in inflation would warrant a rate hike at the Reserve Bank of Australia’s upcoming meeting on 3rd May. But we think the Bank will wait until the June meeting, where we now expect the cash rate to rise to 0.50% We expect rates to reach 2% by the end of this year and 2.5% by mid-2023, which would be a bit more aggressive than the Bank’s last two tightening cycles.

27 April 2022

RBA Watch

RBA to hike aggressively as inflation surges

With Governor Lowe warming to the idea of tighter policy, we’re sticking to our forecast that the RBA will start to hike rates in June. Our forecast that rates will peak at 1.75% is above the analyst consensus of 1.25% but far lower than the peak of 3.25% priced in by financial markets.

30 March 2022
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RBA Watch

Further jump in inflation to prompt June rate hike

We now expect the RBA to start hiking in June in response to stubbornly high inflation. And while high household debt is a concern, the extreme tightness of the labour market coupled with continued loose fiscal policy means that rates may rise faster than most anticipate.

RBA Watch

Surge in inflation will prompt first rate hike in August

The rapid tightening of the labour market coupled with the acceleration in underlying inflation will prompt the Reserve Bank of Australia to end its asset purchases at its meeting on Tuesday 1st February. And we now expect the Bank to hike rates to 1.25% by end-2023, with the first hike coming in August. Drop-In (08:00 GMT, 26th Jan): Will the RBA follow the Fed this year? Economists from our Australia and Markets services will talk through the likely path of RBA policy making in 2022 and the implications for Australian bond and currency markets. Register here.

RBA Watch

Market pricing on RBA still too optimistic

The rapid rebound in activity from the recent lockdowns coupled with a further pick-up in underlying inflation should prompt the Reserve Bank of Australia to taper its bond purchases in February and to end them in August. However, we believe that the financial markets are too optimistic about both the timing and the scale of rate hikes.

RBA Watch

RBA’s dovish view increasingly under pressure

The acceleration in underlying inflation increases the pressure on the RBA to adjust its forward guidance. But with wage growth still sluggish, we think it will stick to its pledge that rate hikes are unlikely before 2024 at next week’s meeting. We expect price pressures to remain stronger than the Bank and expect the first rate hike in early-2023.

RBA Watch

RBA set to hike in 2023

With the latest lockdowns set to end next month, we expect the RBA to taper its bond purchases in February. We still expect wage growth to accelerate more rapidly than the Bank anticipates and stick to our forecast for the first rate hike in early-2023.

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