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Sell-side view changes following today's RBA 50bp hike

RBA
  • ANZ: "This is stronger than the language set out in May and suggests at least another 50bp increase is on the cards over the next few months... August seems more likely than July, coming as it does after the Q2 CPI data and a couple more employment reports. As such, we think the RBA will hike by 25bp in July and then deliver a 50bp increase in August. One or two more rate hikes over the remainder of 2022 are possible if the data remain “resilient” despite all the various pressures facing households"
  • Barclays: "The move today suggests to us that the RBA has made a clear pivot from what seemed to be a less hawkish tone in the May meeting... We expect another 50bp hike in July, followed by 40bp in August, which will take the cash rate to 1.75%. The next hike would more likely be in September (one day prior to the Q2 GDP release) rather than October... After the cash rate reaches a minimum floor of 2.0%, however, we think the bar for further increases becomes higher, and data dependency will return."
  • CBA: "There has been a clear shift in tone and stance from the Board and we now expect the RBA to front load rate hikes... We have revised our profile for the cash rate and now expect a further 50bp rate hike in July followed by 25bp hikes in August, September and November that will see the cash rate target at 2.10% by the end of the 2022 (a level which we consider to be significantly contractionary). The risk is a higher year end cash rate of 2.35% which could occur with a hike of 50bp in August."
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