Cash rate will peak at 4.85% by September

While headline inflation plunged in May, we doubt that this will have assuaged the Bank’s concerns about soaring unit labour costs and rising inflation expectations. Accordingly, we’re sticking to our forecast that the Bank will lift the cash rate by 25bp at each of its next three meetings, with rate cuts only happening in Q2 2024.

ANZ Drop-In (4^th July): Why the RBA’s war on inflation will end in recession. Join this special post-RBA briefing on what more the Bank will need to do to get price pressures under control, and the macro and market implications of any further tightening. Register here.