VIEW: NAB: Hawkish Language

NAB note that their “view has been that the RBA would hike rates again in March to 3.60% and then pause. Today’s hawkish statement highlights the real risk that the RBA feels the need to take rates higher than this, with a terminal rate perhaps as high as 3.85-4.10%. We are currently reviewing our forecasts, pending input from our NAB Business Survey to be released on Tuesday next week and monthly consumer spend data also released next week.”

• “The RBA remains cautious on the impact on monetary tightening to the household sector, and repeats that “monetary policy operates with a lag and that the full effect of the cumulative increase in interest rates is yet to be felt in mortgage payments. There is uncertainty around the timing and extent of the expected slowdown in household spending”. The RBA Board is still hoping to keep the economy “on an even keel”, but “uncertainties mean that there are a range of potential scenarios for the Australian economy”.”