The Reserve Bank of Australia (RBA) hiked the cash rate by 25 bps to 3.6% as expected. Economists at ANZ Bank the central bank to deliver more hikes in April and May to a peak of 4.1%.

Further tightening ahead

“The RBA delivered the expected 25 bps rate increase. Today’s statement confirmed the RBA plans to take the cash rate higher over coming months. Changes to the statement, however, suggest the timing will be more data dependent giving the RBA an option to pause if the recent run of soft data continues.”

“We don’t expect that to be the case and continue to forecast the cash rate target to rise 25 bps in both April and May to a peak of 4.1%.”

“In his speech tomorrow on Inflation and Recent Economic Data, we expect Governor Lowe will further downplay the recent softness in the data and highlight ongoing high inflation and the costs to the economy, as well as the likelihood of tightening in coming months.”