One more RBA hike should do the job

RBA policymakers continued to signal concerns about upside risks to inflation, while survey data showed that firms still face elevated price pressures. We expect a 25bp hike to 4.60% later this month, but think the 5% terminal rate priced by markets is too high given that policy will then be clearly restrictive and the housing downturn is likely to deepen. That said, the renewed surge in oil prices means risks around our forecast are tilted towards further tightening.