MNI Survey of RBA Cash Rate Forecasts: NAB Revises Hike View

By Sophia Rodrigues

     SYDNEY (MNI) - Economists at National Australia Bank revised their view on

the Reserve Bank of Australia's cash rate, now expecting just one hike this year

in November versus previous forecast for two hikes.

     However, their conviction on the rate call isn't very strong with chief

economist Alan Oster saying Wednesday it is not impossible that the RBA remains

on hold this year and starts raising in early 2019. 

     Oster has cited weak wages growth and slow progress in reducing

unemployment as the key reasons for a change in forecast and said the key

determinants going ahead will be the strength of wages and consumer spending,

unemployment and core inflation.

     NAB's view is now in line with Commonwealth Bank economists who are also

expecting the first hike in November. Westpac economists don't expect any change

this year and the next while ANZ economists expect rate hike in 2019 but have

left the precise timing open.

     Earlier this month, TD Securities also revised their view to just one hike

in November from previous forecast for hikes in May and November. Bank of

America-Merill Lynch also did the same, and now expect just one hike this year,

in Q4.

     Meanwhile, Goldman Sachs economists expect the RBA to hike in May though

they are assigning just a 55% probability.

     Below is a table of forecasts for the next RBA cash rate decision on

Tuesday and the outlook for the cash rate. The cash rate is currently at 1.5%.

                    March 6                                        Outlook

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NAB                    Hold        25bps hike in Nov 2018; 2 hikes in 2019

ANZ                    Hold                    Hold in 2018; Hikes in 2019

Westpac                Hold                                Hold 2018, 2019

CBA                    Hold                         25bps hike in Nov 2018

Goldman Sachs          Hold                         25bps hike in May 2018

Citigroup              Hold                                Hike in Q4 2018

JPMorgan               Hold                    Hold for foreseeable future

HSBC                   Hold                 25bps hike in Q3 2018, Q1 2019

TD Securities          Hold                         25bps hike in Nov 2018

UBS                    Hold                          25bps hike in H1 2019

Deutsche Bank          Hold                              Hold through 2018

AMP Capital            Hold                                 Hike late 2018

Moody's                Hold                              Hold through 2018

St. George             Hold                          25bps hike in Q1 2019

Macquarie              Hold  25bps hike Aug and Nov 2018, Feb and May 2019

Nomura                 Hold                          25bps hike in Q1 2019

RBC Capital            Hold                              Hold through 2018

BankAm-ML              Hold                           25bp hike in Q4 2018

Morgan Stanley         Hold                              Hold through 2018

Standard Chartered     Hold                             Hold until Q4 2018

Wells Fargo            Hold                            Hold well into 2018

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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