VIEW: TD Securities Now Expect No Further Hikes

TD Securities “now forecasts the RBA target cash rate to peak at 3.60%. Our prior call was for a 4.35% terminal cash rate (25bps hikes in April, May and August).”

• “Bank communications since the 7th March Statement have clearly indicated the RBA's strong intention to consider pausing. The monthly CPI prints now provide that scope.”
• “Although the monthly CPI series is experimental, the softer prints for Jan and Feb remove the urgency for the Bank to hike at its April meeting.”
• “Further, the monthly outcomes imply a high likelihood Q123 headline CPI comes in below ours and the RBA's forecast giving the Bank room to remain on hold in May.”
• “Meanwhile, dislocations in U.S. financials and a lower Fed Funds terminal rate than we previously anticipated remove the RBA delivering a 25bps August hike from our forecasts.”
• “If we are wrong, we would expect the RBA to hike 25bps in April and then move to the sidelines rather than pause in April and hike in May sending mixed signals to the market. There is also the possibility the RBA may hike later in the year after a pause.”