VIEW: CBA: Another Hike And Easing Not Seen Until 2024

CBA write “we have updated our RBA call in light of the 25bp rate hike at the June Board meeting, RBA Governor Lowe’s speech today and the Q1 23 national accounts.”

• “We now expect one further 25bp increase in the cash rate for a peak of 4.35% and see it most likely at the August Board meeting. The risk is a 25bp rate hike earlier in July. And there is also a risk of 25bp rate rises in both July and August, which would take the cash rate to 4.6%.”
• “We have pushed out the timing of the start of rate cuts from Q4 23 to Q1 24 – we expect 125bp of easing in 2024 (50bp of rate cuts in Q1 24 and further 25bp rate cuts in each of Q224, Q324 and Q424, which would take the cash rate to 3.10% at end 2024).”
• “The Australian economy contracted on a per capita basis in Q123 and we expect a per capita recession to be confirmed in the Q223 national accounts. A recession now looks a distinct possibility in H223 and we put the chance at 50%.”