Expecting a “much larger inflation overshoot”, analysts at Goldman Sachs see the Reserve Bank of Australia (RBA) hiking key interest rates in August as well as in September this year.
Key quotes
“Expect soaring fuel prices from Russia’s invasion of Ukraine together with disruptions related to major floods across Australia’s eastern coastline to lift annual growth in headline CPI to 5.3% by June 2022.”
”See trimmed mean inflation accelerating to 3.9% and remaining above the RBA’s 2-3% target band until early-2023, from 2.6% at the end of December.”
“Given this mix of a much larger inflation overshoot – yet manageable risks to growth – we now expect the RBA to deliver back-to-back rate hikes in August and September.”
“The RBA to adopt “more of a risk management stance on concerns that structurally higher commodity prices will elongate global supply-side pressures and un-anchor inflation expectations.”
“See a third rate rise in November and predicts the RBA will end its tightening cycle by the third quarter of 2024 with the cash rate at 2.50%.”
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