Three of the big four banks believe the cash rate has peaked

Three of the big banks, CBA, Westpac and ANZ, believe the cash rate has already peaked at 4.10 per cent, with only NAB expecting one more hike later this year.

CBA, Westpac and NAB economic teams updated their cash rate forecasts on the back of yesterday’s RBA Board meeting, with changes to both the expected peak, but also the timing of their previously predicted cuts in 2024 and 2025.

CBA now expects the cash rate will start falling from March of next year (previously February). ANZ does not expect to see a cash rate cut until late 2024.

ANZ’s cash rate forecast, which predicted a peak of 4.10 per cent prior to Tuesday’s meeting, remains unchanged.

Big four banks’ current cash rate forecasts:

• CBA: peak of 4.10%, with four cuts next year, starting in March, down to a cash rate of 3.10% by end of 2024.
• Westpac: peak of 4.10% with the first cut in September 2024. Total of six cuts across 2024 and 2025 to 2.60% in late 2025.
• NAB: One more hike in November 2023 to a peak of 4.35%, with five cuts in 2024 and 2025 to a cash rate of 3.10% by early 2025.
• ANZ: peak of 4.10% with one 0.25% cut in late 2024.

RateCity.com.au research director, Sally Tindall, said: “This second consecutive pause is significant. The Board no longer needs to continue its rapid-fire approach to hiking the cash rate now the data is moving in the right direction.”

“While there’s every chance we might need further cash rate hikes, there’s also a chance we’re at the peak,” she said.

“This second pause gives the Board time to assess whether or not the cash rate needs further tightening. The last thing it wants to do is hike unnecessarily and tip the economy off the tightrope.

“If you’ve got a mortgage, take the glass half empty approach for now. Plan for up to two more hikes and don’t even entertain the idea of cash rate cuts. It’s important to be prepared if things don’t go to plan,” she said.

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