WPAC remarks (in brief)
- The RBA Board lifted the cash rate by 0.25%, further than our forecast of 0.15%. That surprise emphasises that the Board believes that it has a daunting task to bring underlying inflation back from its forecast 4.75% to the top of the 2-3% band by mid-2024.
- Accordingly, we have lifted our forecast for the next move in June from 25 basis points to 40 basis points, while the rest of the profile remains unchanged.
WPAC says the RBA signalled:
- the Board should be prepared to “front load” its tightening cycle
And:
- In the press conference the Governor revealed the interest rate path that was used to arrive at the forecasts.
- He noted that the cash rate profile was 1.5%-1.75% by end 2022 and 2.5% by end 2023, most likely the base terminal rate.
RBA Gov Lowe:
