Westpac forecasts the RBA terminal rate to 4.6% in August

WPAC had expected a +25bp rate hike in July, which they still expect, but add in:

• We now expect a further final increase in the cash rate of 0.25% to 4.6% at the August Board meeting, for a peak in the cycle of 4.6%.

In their reasoning WPAC cite:

• The May Labour Force Survey tips the balance on our August call. It showed an increase in employment of 76,000, outstripping even our top-of-the range forecast for a 40,000 bounce
• The stronger rebound means we now have average growth of 36,000 jobs over the two months – around the monthly pace we have seen over the past year, indicating no significant slowing of jobs growth despite the RBA’s 400 basis points of tightening over the same period.
• The evidence of strong ongoing momentum in the labour market is sufficient to trigger the “considerable risk” of an August rate hike in our central forecast.

Current Reserve Bank of Australia cash rate:

Earlier:

• National Australia Bank raise their RBA terminal rate forecast to 4.6% (from 4.35%)

• ANZ now sees the cash rate peaking at 4.6% by August. ANZ's previous forecast was 4.35%.

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AUD little changed.