The RBA gave a sneak preview of its SoMP forecasts back on Tuesday. Governor Lowe reincarnated in a new hawkish form when
we had the first cash rate hike for over 11 years:
RBA raises cash rate by 25 bps to 0.35%
A cheeky move by the RBA helps to lift the aussie
RBA’s Lowe: Expects that further rate hikes will be necessary in the months ahead
RBA’s Lowe: A more normal level of rates would be 2.50%
Since then we have had some updated analyst forecasts:
Goldman Sachs is forecasting the RBA cash rate at 2.6% by the end of 2022
Westpac forecast a 40bp cash rate hike from the RBA on June 7
The RBA Statement on Monetary Policy will deliver an update to its forecasts and provide more detail surrounding the RBA’s views on the risks to the economic outlook.
RBA Statement of Monetary policy will add some welcome context to May forecasts previewed in the post-meeting statement. Recall they saw underlying inflation revised up 2ppt from the February Statement to 4¾ over 2022 and slowing only to 3% to mid 2024 and a further improvement in the path for unemployment.
We will be looking for the RBA’s characterisation of the balance of risks to those forecasts and the outlook.