Via a Commonwealth Bank of Australia note on their Reserve Bank of Australia outlook.
This is the summary:
- Our assessment is that the 2023 Commonwealth Budget does not add to inflationary pressures in the economy.
- As such, we have not changed our forecast profile for inflation or our call on the RBA.
- Our central scenario puts the current 3.85% as the peak in the cash rate, while the near-term risk sits with another rate hike.
- Despite the 2023 Budget’s modest and targeted 'cost of living relief’, the budgets of many home borrowers and renters will be under considerable strain over the coming year.
- We continue to expect 50bp of rate cuts in Q4 23 and a further 75bp of easing in 2024 that would take the cash rate to 2.6% -a more neutral setting.
- The risk to the timing of the commencement of the easing cycle sits with the first cut arriving in Q1 24 rather than late 2023.
- The upcoming Fair Work Commission(FWC)decision on the national minimum wage will be critical to the outlook for wages growth and by extension inflation and the monetary policy outlook.
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CBA graph:
ps. I think the above graph is of 3 scenarios CBA have for the RBA.
The middle projection is CBA base case. I could be wrong on this, I may have misinterpreted the graph.