The Reserve Bank (RBA) Board left the cash rate unchanged for the second straight month at 4.10%. Over the last five months the RBA has left rates on hold on three separate occasions. This shows that we are at or near the cash rate peak. It also shows that the Reserve Bank is becoming more confident that they have done enough to bring inflation down to the 2-3% target. The Reserve Bank’s forward guidance suggests that the incoming data would need to convince the Board that inflation is deviating from its disinflationary path to trigger further hikes. We see the economy slowing further from here under the weight of higher interest rates. This means we do not expect to see the Reserve Bank to hike again this cycle.
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Disinflationary pulse gathering momentum
Inflation slowing but murkier picture beneath the surface
This document has been created by Westpac Financial Services Limited (ABN 20 000 241 127, AFSL 233716). It provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such. This information has been prepared without taking account of your objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. Projections given above are predicative in character. Whilst every effort has been taken to ensure that the assumptions on which the projections are based are reasonable, the projections may be based on incorrect assumptions or may not consider known or unknown risks and uncertainties. The results ultimately achieved may differ materially from these projections. This document may contain material provided by third parties derived from sources believed to be accurate at its issue date. While such material is published with necessary permission, Westpac Financial Services Limited does not accept any responsibility for the accuracy or completeness of or endorses any such material. Except where contrary to law, Westpac Financial Services Limited intends by this notice to exclude liability for this material. Information current as at 10 December 2021. © Westpac Financial Services Limited 2021.