SYDNEY, Feb 24 (Reuters) - Australia's major banks are
lifting their forecasts for interest rates in the wake of a
decidedly hawkish turn in central bank messaging, and despite
some downward surprises on wages and jobs data in recent weeks.
Westpac on Friday became the latest to revise up its
expected peak for rates by a quarter point to 4.10%, tipping
quarter-point hikes in March, April and May.
Rates are already at a decade-high of 3.35%, but the Reserve
Bank of Australia (RBA) was still warning that at least two more
hikes would likely be needed to be sure of taming inflation,
which has persistently surprised on the high side.
Economists at NAB and ANZ were already up at 4.1%, leaving
CBA as the lone dove at 3.85%.
All were trailing the market, which had priced in 4.1% two
weeks ago and was now flirting with the chance of a 4.35% peak,
in part reflecting rising expectations for U.S. rates following
a run of strong data there. Yet, recent Australian data has been less robust with
employment and wages both surprising on the downside. The wage
outcome in particular could help temper RBA concerns that high
inflation would morph into a damaging price-wage spiral.
"By the time of the June meeting, we expect that there will
be credible evidence that demand is slowing, labour markets are
easing and risks of a wage/price spiral have receded," Westpac
chief economist Bill Evans said.
"Further out, the next move is likely to be a rate cut
beginning in the March quarter 2024," he added.
Felicity Emmett, a senior economist at ANZ, suspects core
inflation will prove stickier than hoped after surprising with a
broad-based jump to 6.9% in the December quarter.
"This stickiness underpins our 'higher for longer' view on
rates, and we expect the RBA will hold the cash rate at 4.1%
until late 2024," Emmett said.
(Reporting by Wayne Cole; Editing by Jamie Freed)
Messaging: wayne.cole.thomsonreuters.com@reuters.net))
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.