Initial post is here with the gist of it:
Adding a little more detail. This in brief from a much longert note:
RBA Governor Lowe gave a very rare and unscheduled television interview which we interpreted as a hawkish signal for rates.
We interpreted the substance and timing of Governor Lowe’s comments as consistent with a more front-loaded tightening cycle and have adjusted our rate forecasts accordingly.
GS forecasts now:
- RBA to hike 50bp at July’s meeting
- 50bp increases in both August and September (prior: both +25bp)
- Having removed emergency policy settings, we expect the RBA to then slow the pace of tightening to +25bp increases in each of the October, November and December meetings
- taking policy to a 3.1% terminal rate by year-end (prior: 2.60%; cf. GS/RBA estimate of a c.2.5% ‘neutral’ rate)
- We view the balance of risks to our revised forecast as skewed to the hawkish side and note that larger 75bp rate increases over the coming months cannot be ruled-out.
