ANZ Now Expects Cash Rate Peak at 4.35%

The local bank has revised higher its peak RBA cash rate expectation. The bank now expects the rate to peak at 4.35%, versus 4.10% prior. ANZ noted that a higher cash rate is needed to bring down inflation back to target within a reasonable time frame.

• The bank noted that: “We consider August the most likely month for a move from the RBA, driven by the quarterly forecast update cycle and uncomfortable timing around the return of inflation to the target.”
• “Ahead of that we expect an increase in either June or July (calling the month is a line ball decision in our view).”
• “Given our view that higher rates are more likely and the long tendency of the bank not to delay, at the margin we favor a June rate hike.”