...I don't think anyone even contemplate that there won't be any rate cuts this year, let alone a rate hike possibility.
...economy and markets are about to get blindsided again. Another RBA rate rise a ‘material possibility’: Deutsche
Alex Gluyas
Deutsche Bank says there is a ‘material possibility’ that the Reserve Bank will lift rates this year following Wednesday’s hotter-than-expected inflation print.
The bank’s chief economist for Australia, Phil O’Donaghoe, has warned there is now a heightened risk the RBA’s trimmed mean forecast for the second quarter will prove too low.
While Deutsche is sticking with its “base case” that the RBA will cut rates by 0.25 percentage points in November, it cautioned that an August increase could still be on the table.
“The remainder of this year could see a cut, no change, or a hike,” O’Donaghoe said. “If our base case is wrong, delayed easing into 2025 is the most likely alternative, but a rate hike in 2024 also remains a material possibility.”
“Whichever of these scenarios prevails, the RBA will wait to see the full suite of price updates for Q2, especially given recent evidence of a materially weaker labour market. But that also means August could be ‘live’ for a hike.”
