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VIEW: Westpac Frontload RBA Rate-Hike Forecast

RBA

Westpac write in a note that they "have not changed our call for the first hike in the overnight cash rate by the RBA since June 2021 when we were early to challenge the “not till 2024” consensus. Our “target” then was a first hike at the February Board meeting in 2023. Developments since then have now prompted us to bring forward that tightening date to the meeting on August 2, 2022."

  • "We now expect one hike of 15 basis points in August to be followed by a further hike of 25 basis points in October. This revised timing for the first move is still well short of market pricing which is for the first hike to occur in June."
  • "We understand that the Governor has firmly indicated that he does not expect to be raising rates until very late 2023 or 2024and that this expectation is entirely consistent with the Bank’s current economic forecasts. But we have quite different forecasts for: inflation; wages growth and the unemployment rate."
  • Westpac Economics "is is now forecasting growth for 2021 and 2022 of 3.2% and 5.5%, respectively. That is revised from the pre-omicron profile of 2.8% and 6.4%, with a net reduction of 0.5%."
  • Click here to see the full note.
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