VIEW: Westpac Stick With Terminal Rate Call Despite 25bp Hike

Westpac Bill Evans writes “We do not share the RBA’s confidence around the containment of wage pressures and expect that economic growth will have to slow to 1% in 2023 to achieve an acceptable slowdown in inflation and wages growth.”

• “By engineering this positive surprise with today’s decision the end result is likely that the tightening cycle will need to be extended into March when another update on wages growth will be received by the RBA.”
• “Consequently, we retain our forecast that the cash rate will peak at 3.6% although now that the sequence of increases has slowed to 25 basis points per meeting the last increase is now likely to be March rather than February.”