RBA still likely to lift rates to 3.6% by mid-2023

The RBA downplayed the importance of its revised estimate of the neutral interest rate published this week. For what it’s worth though, the Bank’s analysis implies that the cash rate remains below neutral levels, consistent with our view that interest rates will rise a bit further than most anticipate. The strength in recent business surveys also suggests that the Bank has more work to do, though there are mounting signs that inflationary pressures are weakening.