RBA to hike next month, pause in April and hike in May – TDS

The RBA updated its economic forecasts in its quarterly Statement of Monetary Policy (SoMP). Economists at TD Securities expect the central bank to take a breather at its April meeting. However, a May hike looks highly likely. 

Further interest rate hikes ahead

“There are no significant surprises in the RBA's fresh set of forecasts. Inflation and Wage forecasts were revised up with little to no change in GDP and unemployment projections.”

“The RBA assumes a cash rate peak of 3.75% in H2'23. The risk is this peak is achieved earlier and/or exceeds the RBA's forecast, with a 4% cash rate.”

“The Bank is mindful of the lags in monetary policy but is acutely aware of the upside risks to wages/inflation. We expect the RBA to hike next month, pause in April and hike in May.”