2 min read | 12 Jul, 2021
RBA cash rate remains steady, but major lenders predict early interest rate hike
The official cash rate will remain at 0.1%, following the Reserve Bank of Australia’s (RBA) July Monetary Policy Meeting.
The announcement marks the eighth consecutive month of the historically low cash rate, which the RBA has previously stated will stay put until at least 2024.
However, due to the strong recovery of the economy from the impacts of COVID19, some of Australia’s biggest lenders are predicting an earlier cash rate rise.
What are the big 4 banks predicting?
ANZ were the first to predict an earlier cash rate rise, believing that the benchmarks for the 2024 raise will be reached earlier than expected.
The bank’s economic team predicts inflation could top 2%, and wage growth could surpass 3% midway through 2023, thanks to a tighter labour market.
It is possible that the conditions for rate hikes arrive even earlier than the second half of 2023 if the recent trend of rapid improvement in the economy continues.
But there is also the prospect that the recovery is knocked off-track by COVID and rate hikes are delayed, they said.
According to the Commonwealth Bank of Australia’s (CBA) Economist Gareth Aird, the CBA predicts a rate rise by November 2022 thanks to the better-than-expected recovery of Australia’s labour market.
Mr Aird said the CBA predicts a cash rate rise of 15 base points, taking the rate from 0.1% to 0.25%. They also predict a further increase of 25 base points to follow in December 2022.
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