More on Westpac forecasting an RBA cash rate hike in early 2023

Justin had the headlines on this on Friday: We expect the RBA will begin it's tightening cycle in Q1 of 2023

• By then, we expect that the conditions for that first rate increase around full employment and inflation will have been met while wages growth will be close to 3%.

You'll recall that the Reserve Bank of Australia have been repeating (over and over) that they expect the conditions for a first rate hike will not be met until 2024 at the earliest.

WPAC say Thursday's job report was significant:

• a major 'game changer' for policy
• underscores the strength of momentum in the economy
• endorses the range of other measures pointing to a very strong labour market
• The recovery is now clearly into a self-sustaining upswing and the need for emergency stimulus policies has eased significantly

WPAC projections for a rate hike cycle:

• an increase of 15 basis points in Q123
• to be followed by 25 basis points in Q223
• and 25 basis points in Q423
• That would restore the cash rate to 75 basis points by end 2023, in effect reversing the 'emergency' rate cuts seen in 2020

As a ps. ANZ shifted their forecast for an RBA rate hike to 2023 also, even earlier last week:

• ANZ's latest call on RBA rate hikes - beginning in H2 2023

And, after the jobs report ANZ is considering moving their rate hike projection even sooner:

• The labour market is tightening faster than we expected, potentially pressuring our call for a rate hike in H2 2023.

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Thursday's job report was a blockbuster, ICYMI:

• Australian May Employment Change +115.2K (expected +30K) & Unemployment Rate: 5.1% (expected 5.5%)
• Australia's 'stunning' jobs report, wage pressure 'will only grow'

RBA boss Lowe: