VIEW: RBC Add Extra 25bp Hike Into Profile & Look For Terminal Rate of 3.10%

RBC write “with the cash rate now firmly in the neutral zone, and early signs of moderation in the suite of housing-related indicators, with the impact of rate hikes yet to fully filter through, conditions are emerging for the RBA to step down its pace of tightening. Governor Lowe’s Anika Foundation speech appeared to lay the groundwork for this but we are mindful that the global pull is still very much skewed towards outsized policy rate increases, a singular focus on inflation and a shift into restrictive settings. Accordingly, we retain our base case for 25bp hikes in Oct and Nov but add a final 25bp to Dec to see terminal at a clearly restrictive 3.10% by year-end. The risk still remains skewed towards another 50bp in Oct and even higher terminal.”