VIEW: TD Securities Roll Forward RBA Hike View, Tweaks QE Call

TD Securities now expect "the RBA to begin lifting the cash rate in May '23 vs. earlier call was for the RBA to begin normalising the cash rate in Nov '24. The prior forecast for the late 2024 RBA hike relied heavily upon the RBA waiting for the Fed to hike first and the Bank achieving its 3% annual wages growth target. However, the case for the RBA waiting for the Fed to hike first has weakened considerably. We also sense the Bank is distancing itself from 3% wages growth to hike. Following the strong May employment print, our scenario analysis now suggests the RBA is on track to achieve its 'upside' unemployment scenario by Dec '22. The risk to our May '23 rate hike call is for the Bank to lift the cash rate in Q123 or earlier. We now expect the Bank to announce a QE3 program of "up to A$100bn." This provides the Bank more optionality and improved signaling over our earlier call for a further A$100bn in stimulus via A$50bn in QE3 and A$50bn in QE4."