...is this going to make longer term duration TDs go any higher,....Macquarie Bank tops with 4.1% over 4 & 5 years.
50bp rate rise now likely in October: NAB
Emma Rapaport
NAB has raised its interest rate expectations to 50 basis points next month from 25 basis points “in light of recent data” and statements from the RBA governor this morning.
Analysts continue to expect a 25 basis point rise in November taking the cash rate to 3.10 per cent.
Alan Oster, NAB group chief economist:
“Since July, our view has been that the RBA would slow the pace of rate rises in October to 25bp, before pausing after the November meeting. However, in light of recent data and the governor’s statement, we are now of the view that when the Board debates the decision in November, it will conclude that the balance of inflation risks argues against a step down in the pace of rate rises.”
“We therefore expect a fifth consecutive 50bp rate increase in October, taking the cash rate to 2.85%. We then expect a step down to occur with a 25bp rise in November taking the cash rate to 3.10% by year-end. We still expect the RBA to pause the hiking cycle after November to assess the impact of rate hikes taken across 2022 and the evolution of inflation, the labour market, and the economy.”
NAB analysts cited the bank’s latest Business Survey which suggests business conditions remained elevated through August and another very strong inflation print in Q3.
They also pointed to the tight labour market with unemployment around 3.5 per cent, exciting wages growth to pick up to 3.2 per cent by the end of 2022 and 3.4 per cent in 2023.
On Lowe, analysts pointed to the governor’s statement that “the general inflation psychology appears to be shifting; it is easier for firms to put their prices up and the public is more accepting of this”.
“To us this is a significant shift and suggests an increased concern that more needs to be done to keep inflation expectations anchored,” analysts said.
