VIEW: Westpac’s Evans Tweaks RBA View

After tweaking his Fed view, Westpac chief economist Bill Evans notes that “we have not changed our core views that the RBA tightening cycle will begin in August with the cash rate peaking at 1.75%. Even though we are still on board with the RBA Governor’s intentions to run policy according to Australian conditions rather than following FOMC policy the more determined actions of the FOMC are likely to slightly accelerate the RBA’s tightening profile.”

• They still see a 15bp lift off in Aug, followed up by a 25bp hike in October, but now “expect the RBA to bring forward the third hike from Feb ‘23 to Dec ‘22, with the cycle ending in Nov ‘23 rather than Feb ’24 (after 25bp hikes in Feb, May, Aug & Nov ‘23).”
• “This would mean that the RBA would end ‘22 having restored the 65 basis points of emergency cuts which it implemented during Covid.”