While many analysts are tipping that Australians will spend through Christmas and deal with the fallout from high cash rates, inflation, and dwindling savings in the new year, Westpac’s chief economist is predicting interest pain will continue to roll on..
Westpac chief economist Bill Evans (below) expects the RBA to raise the cash rate by a further 25 basis points in November, followed by a run of three more 25bp hikes.
25 basis point jumps in November, December, February, and March will see interest rates hit 3.6 per cent.
Westpac previously noted that “drawing out policy adjustments would also help to keep public attention focused for a longer period on the Board’s resolve to return inflation to target.”
Evans notes these benefits to a series of 25bp jumps, adding: “The risks to this profile are that the Board sees a need to extend the cycle even further, although, as signalled by the Leading Index and our own forecast for 2023, by the June quarter, the evidence will become clear that a significant slowdown is underway.”
The RBA will deliver its next rate hike on November 1.