VIEW: Goldman Add October Hike To Profile

Post-Budget, Goldman Sachs suggest that “from the RBA’s point of view, we think the additional near-term support for households is likely to have marginally hawkish implications for rates in H222. Until now, we had expected the RBA to lift the cash rate by 15bp in August 2022 followed by 25bp hikes in September and November. While we are mindful of risks in both directions, we now expect the RBA to also hike 25bp in October, meaning the RBA will hike at each meeting between August and November, before switching to a quarterly pace of hikes in 2023 and ultimately reaching a terminal rate of 2.50%. In the interim, we expect the RBA to start QE tapering in May, with an earlier rates lift-off in June quite possible on stronger-than-expected inflation and lower-than-expected unemployment over the coming months.”