Invest
'The RBA will raise interest rates next week'
“The RBA should and likely will raise interest rates next week by 15 bps,” an economist with BetaShares has said.
'The RBA will raise interest rates next week'
“The RBA should and likely will raise interest rates next week by 15 bps,” an economist with BetaShares has said.
Given heightened global supply chain bottleneck problems and more aggressive rate hikes expected in the US, BetaShares’ economist has revised his rate hike forecast and is now tipping the Reserve Bank (RBA) to lift rates by 15 bps next Tuesday.
“The case to hike is so obvious it need not feel bound by next month’s wage report,” economist David Bassanese said.
It was previously expected that the RBA would wait for the wage cost index report next month to confirm a lift in annual wage growth towards 3 per cent before hiking rates. But broad based price pressures and Wednesday’s consumer price data are now predicted to encourage the bank to take more aggressive action.
Westpac, on the other hand, expects the RBA to wait until June, believing that it will then hike by an outsized 40 bps.
“It is now generally accepted that the RBA will begin the tightening cycle on 7 June,” said Bill Evans, chief economist at Westpac said late last week.
“Because the current cash rate is an unusual 10 basis points we had expected that the first move would be 15 basis points to restore the cash rate to 25 basis points.
“However, given our expectations of a rapid further increase in underlying inflation and a forecast fall in the unemployment rate for April to a 48-year low of 3.8 per cent, we expect the board will decide on a bolder initial lift in the cash rate,” Mr Evans continued.
But BetaShares doesn’t quite agree.
According to Mr Bassanese, while inflation pressures are building in Australia, “we don’t need to risk jarring economic sentiment with a ‘shock and awe’ 40-bps move next month”.
“I think it makes more sense to start off slow with 15 bps next week, followed by a traditional 25 bps move in June," he said.
The only real argument for delay is the current Federal election, but this, he noted, could serve in the bank's favour.
“As was last the case in 2007, I think this is another good opportunity for the RBA to again demonstrate its independence,” he said.
As of 26 April, Commonwealth, NAB and ANZ are tipping a 0.15 bps rate rise in June.
RELATED ARTICLES
About the author
About the author
Economy
Economist calls for July RBA rate cut following inflation data
An economist from State Street Global Advisors has called for the Reserve Bank of Australia to cut interest rates in July following today's Consumer Price Index data for June. Read more
Economy
GDP data prompts economist to predict faster RBA rate cuts
Australia's latest GDP growth data has come in significantly below expectations, prompting an economist to suggest the Reserve Bank may need to ease monetary policy more aggressively. Read more
Economy
Global markets face turbulent start amid tariff concerns, but outlook remains cautious
Global equity and bond markets have experienced a turbulent start to 2025, primarily due to concerns that a potential tariff-driven trade war could heighten inflation and recession risks. Read more
Economy
RBA may cut rates faster if GDP data disappoints, economists say
The Reserve Bank of Australia may cut interest rates more quickly if next week's GDP data disappoints, economists said following today's consumer price index data for May. Read more
Economy
RBA delivers widely expected rate cut as inflation optimism balances global uncertainty
The Reserve Bank of Australia has cut the cash rate by 25 basis points, delivering on widespread market expectations while signalling a clearer directional shift towards less restrictive monetary ...Read more
Economy
Economist warns strong jobs data may delay further RBA rate cuts
Strong employment growth in April has put expectations for multiple interest rate cuts at risk, though upcoming economic data may clarify the need for lower rates, according to State Street Global ...Read more
Economy
Australian inflation continues downward trend, nearing RBA target
The Australian Bureau of Statistics (ABS) has reported that the Consumer Price Index (CPI) rose 2.7 per cent in the year to August, down from 3.5 per cent in July and 3.8 per cent in June. Read more
Economy
UK markets poised for gains after election, global geopolitical risks remain
Chris Iggo, Chief Investment Officer at AXA Investment Managers, has provided an optimistic outlook for UK markets following the recent general election, while cautioning about ongoing global ...Read more
Economy
Economist calls for July RBA rate cut following inflation data
An economist from State Street Global Advisors has called for the Reserve Bank of Australia to cut interest rates in July following today's Consumer Price Index data for June. Read more
Economy
GDP data prompts economist to predict faster RBA rate cuts
Australia's latest GDP growth data has come in significantly below expectations, prompting an economist to suggest the Reserve Bank may need to ease monetary policy more aggressively. Read more
Economy
Global markets face turbulent start amid tariff concerns, but outlook remains cautious
Global equity and bond markets have experienced a turbulent start to 2025, primarily due to concerns that a potential tariff-driven trade war could heighten inflation and recession risks. Read more
Economy
RBA may cut rates faster if GDP data disappoints, economists say
The Reserve Bank of Australia may cut interest rates more quickly if next week's GDP data disappoints, economists said following today's consumer price index data for May. Read more
Economy
RBA delivers widely expected rate cut as inflation optimism balances global uncertainty
The Reserve Bank of Australia has cut the cash rate by 25 basis points, delivering on widespread market expectations while signalling a clearer directional shift towards less restrictive monetary ...Read more
Economy
Economist warns strong jobs data may delay further RBA rate cuts
Strong employment growth in April has put expectations for multiple interest rate cuts at risk, though upcoming economic data may clarify the need for lower rates, according to State Street Global ...Read more
Economy
Australian inflation continues downward trend, nearing RBA target
The Australian Bureau of Statistics (ABS) has reported that the Consumer Price Index (CPI) rose 2.7 per cent in the year to August, down from 3.5 per cent in July and 3.8 per cent in June. Read more
Economy
UK markets poised for gains after election, global geopolitical risks remain
Chris Iggo, Chief Investment Officer at AXA Investment Managers, has provided an optimistic outlook for UK markets following the recent general election, while cautioning about ongoing global ...Read more
