Inflationary pressures push the peak cash rate higher. According to ANZ Bank economists, a higher terminal rate of 4.1% looks likely to be required.

RBA will hold the cash rate at 4.1% until late 2024

“We now have the RBA cash rate target peaking at 4.1% in May 2023, up 25 bps from our previous peak of 3.85%.”

“Persistence in inflation pressures suggests that the cash rate will remain in restrictive territory for some time. We do not expect the RBA to start easing until a 25 bps cut in November 2024.”

“Given that price pressures are intense and look to remain stronger for longer, we have lifted our 2023 inflation and wage growth forecasts and see the higher cash rate as necessary to return inflation to the top of the target band by late-2024.”

“Our revised rate path has the RBA tightening by 25 bps in March, April and May.”