Two leading banks predict Aussies to cop yet another dose of interest rate pain

Two of the big four banks are now predicting a fourth straight rate hike to start the year, as the Reserve Bank of Australia (RBA) tries to combat rising inflation, partly caused by the war in the Middle East.

Governor Michele Bullock acknowledged Australians were “feeling poorer” but said the increase was necessary to give the central bank “space” to assess the global and domestic situation.

Today, the NAB updated its monetary policy forecast and now predicts that interest rates will be raised again to 4.60 percent at the RBA’s next meeting in June.

“The governor explicitly called the ‘wait and see’ strategy the ‘wrong term’ in her press conference, and so it does not appear the board believes time is on its side,” wrote the bank’s economists Sally Auld and Gareth Spence.

“This, together with the administration’s clear preference to prioritize the price stability aspect of its dual mandate, given a generally favorable labor market forecast, suggests that the next rate hike will occur in June.”

Westpac had predicted further rate hikes before yesterday’s rate hike, but believes this will not happen until later this year.

“We think the likelihood that they will now raise rates in June is lower than we previously thought. I mean, it was never a certainty, but it was our base case,” said the bank’s chief economist, Luci Ellis.

“But we still think there will likely be rate hikes from here, but maybe a little bit further than we previously thought.”

The remaining four big banks, Commonwealth Bank and ANZ, are currently predicting a break in June.

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