Three of the four big banks now expect a second cash rate pause on Tuesday

Westpac’s economic team has revised its cash rate forecast, predicting the cash rate will remain on hold at Tuesday’s RBA meeting, and that it is likely to have already reached its peak.

The change in forecast by Westpac, from a 0.25 percentage point hike on Tuesday to a pause means CBA is the only big four bank predicting a hike, although the bank’s economic team has stressed it is a line-ball call.

It also means two of the big four bank economic teams – Westpac and NAB – now believe the cash rate has already peaked at 3.60%.

Big four bank’s current cash rate forecasts

RateCity research director, Sally Tindall, said: “It’s going to be an extremely close call at next Tuesday’s meeting but the odds are stacking up in favour of a pause.” 

“There’s not much in the data this month that’s likely to spur the RBA into further action in favour of buying themselves some more time to see what impact the 10 previous hikes have had,” she said.

“Front of mind for the RBA is the fact that some households haven’t yet started paying for the February hike, let alone the March one. 

“Households are still catching up to these rate hikes, rather than catching their breath. A pause across two consecutive months will give them a much better indication of how households are holding up. 

“That said, people with a mortgage should still plan for a hike on Tuesday. If it doesn’t come next week, it could be only a matter of months away. If it doesn’t come at all, then you’ll have given yourself a bit of extra breathing space and that’s never a bad thing,” she said.

How to get ahead of rising interest rates

• Make extra repayments on your mortgage to chip away at your loan principal (if your lender allows additional repayments without penalty). 
• Utilise your offset account or redraw facility to help reduce your interest charges. The more you put into these accounts, the greater rate cut you could give yourself. 
• Consider refinancing to a lower-rate lender if it suits your financial needs and budget. You could save thousands of dollars in higher interest charges just by nabbing a lower rate loan. 

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