A forecast via Commonwealth Bank of Australia on what is ahead from the Reserve Bank of Australia.
TL;DR version is this:
- We expect one further 25bp rate hike in December which would take the cash rate to 3.10% (our expectation for the peak in the cash rate).
CBA acknowledge a risk to this view:
- The risk sits with a higher terminal rate, but we continue to look for rate cuts in H2 2023 and favour 50bp of in Q4 23.
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Through this RBA rate cycle CBA have been tending towards the dovish side.
More from the note (this in summary)
- The RBA has made an upward revision to their forecast profile for inflation , as expected.
- The RBA now expects annual inflation to peak at 8.0% in Q4 22 and to be 4.7% in Q4 23.
- Underlying inflation is forecast to peak at 6.5%/yr in Q4 22 (which implies an increase of 1.5%/qtr in Q4 22) and to be 3.8%/yr in Q4 23.
- The RBA expects the unemployment rate to be 3.7% by Q4 2023 (we forecast a higher number of 4.3%).
- The RBA’s forecasts for inflation and wages growth indicate that they expect real wages growth to be negative until mid2024.
- The RBA have downwardly revised their GDP profile and expect growth of 2.9%/yr in 2022 and 1.4/yr% in 2023.
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The hike cycle so far from the RBA:
And, FWIW I think CBA is very likely to be wrong on this forecast.