Following the Reserve Bank’s decision to hold the cash rate steady at 4.1%, three big banks now believe the cash rate has peaked, while the other one expects another rate hike later this year.
From its previous February forecast, CBA is now expecting the cash rate to start falling from March of next year. ANZ’s cash rate forecast of 4.1% peak prior to Tuesday’s meeting remained unchanged and does not expect to see a cash rate cut until late 2024.
Below are big four banks’ current cash rate forecasts, according to RateCity.com.au:
“This second consecutive pause is significant,” said Sally Tindall (pictured above), RateCity.com.au research director. “The board no longer needs to continue its rapid-fire approach to hiking the cash rate now the data is moving in the right direction.
“While there’s every chance we might need further cash rate hikes, there’s also a chance we’re at the peak. This second pause gives the board time to assess whether or not the cash rate needs further tightening. The last thing it wants to do is hike unnecessarily and tip the economy off the tightrope.”
Tindall advised those with a mortgage to “take the glass-half-empty approach for now.”
“Plan for up to two more hikes and don’t even entertain the idea of cash rate cuts. It’s important to be prepared if things don’t go to plan,” she said.
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