VIEW: CBA’s Base Case Unchanged

CBA note that “the Board has retained a tightening bias, as expected. The Governor stated that, “the Board expects to increase interest rates further over the period ahead. It is closely monitoring the global economy, household spending and wage and price‑setting behaviour. The size and timing of future interest rate increases will continue to be determined by the incoming data and the Board’s assessment of the outlook for inflation and the labour market.” These sentences are unchanged from the Governor’s October Statement. This wording affords the Board significant flexibility in the policy setting process over the period ahead.”

• ”Our central scenario for the RBA is unchanged following today’s decision. We expect the Board to deliverer one further 25bp rate hike in December which would take the cash rate to 3.10% (our expectation for the peak in the cash rate). The risk sits with a higher terminal rate, but we continue to look for rate cuts in H2 2023 and favour 50bp of easing towards the end of 2023.”