VIEW: What The 'Big 4 'Are Saying About The Terminal Rate & After

The below points summarise the views of the ‘Big 4’ re: the terminal rate of the current hiking cycle and what to expect after that.

• ANZ look for a terminal cash rate target of 3.35% in the current hiking cycle, which they see being in place by the end of the Bank’s November meeting i.e. they look for a further 4 consecutive 50bp rate hikes. They have suggested that there will be a modest easing cycle getting under way around mid-2024, with a total of 50bp of rate cuts by the end of that year
• CBA look for the current hiking cycle to peak at 2.60% with a final hike in November of this year. Beyond that, they look for 2x 25bp rate cuts in ’23 (Aug & Nov),
• NAB see the RBA on hold over their forecast horizon after reaching a terminal cash rate target of 2.85% in November of this year. They do note that “a combination of below trend growth and inflation moving back to target over 2023 and into 2024, as in our forecasts, raises the possibility of rate cuts at some point in 2023 or 2024. With rates close to neutral whether the RBA would feel the need to do so will in part depend on global developments and prospects, as well as domestic fiscal policy settings
• Westpac look for the cash rate target to peak at 3.35% after a final hike in Feb ’23. They have pencilled 100bp of rate cuts for ’24.