With inflation continuing to run hot, economists at Westpac have revised up their forecast for the Official Cash Rate. They now expect the cash rate to peak at 5%.

Inflation refuses to die, activity holding firm

“We now expect the OCR to reach a peak of 5% for this cycle (previously 4.5%).”

We expect a 75 basis points hike to 4.25% at the upcoming November Monetary Policy Statement, a step up from the 50 bps increases in the last few reviews.” 

“Inflation is continuing to run red-hot across the economy, and core inflation is yet to show signs of easing despite the sharp rise in interest rates over the past year.”

“We are also seeing ongoing firmness in domestic economic conditions, including a drum-tight labour market and resilience in household demand.”