Technical Analysis

RBA meet on February 7 – preview – 25bp rate hike cemented in, then another in Match

I posted earlier on expectations for the Reserve Bank of Australia :

And this from CBA:

More from CBA’s forecast:

“The RBA maintained a hiking bias in December and with inflation still strong we expect them to deliver on this at their February Board meeting. We’re maintaining our forecast that they will raise the cash rate by 25bp to 3.35 per cent, before pausing the tightening cycle. However a larger hike of 40bp coupled with a stated intention to pause could also be on the table.

“An important consideration for the RBA is that fixed rate mortgages have so far insulated many Australians from interest rate increases. There is a lag effect on previous rate hikes and large volumes of fixed rate mortgages expiring this year and higher monthly borrowing payments should cool demand. Taking the cash rate further into restrictive territory by the RBA could prove recessionary and counterproductive,”

CBA add this graph:

Also, this from ANZ, tipping February will not be the final rate rise:

  • “Australia’s CPI data showed momentum continued to build in
    domestically driven inflation pressures in Q4. This cements a 25bp
    cash rate hike in February and supports our view of another 25bp hike
    in March,”
  • “We
    saw the RBA did start later than other central banks and it also
    slowed the pace of hikes earlier. So it hasn’t hiked as much as many
    other central banks, including the Reserve Bank of New Zealand. So,
    we do think they are going to do more.”

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