The major banks are deeply divided about the outlook for interest rates, and the difference is worth about $284 a month to a typical recent home buyer. So who will be right?
Deep divisions are emerging among some of Australia's leading bank economists on their outlook for interest rates and the Australian economy.The major banks are split on cash rate forecasts, with Westpac and ANZ tipping a peak of 3.35 per cent and CBA 2.6 per cent
In one camp are those, such as the economists at Westpac and ANZ, who believe that the cash rate target will pass 3 per cent before the end of this year. "The key reason why we insist that a sharper slowdown in demand is required in 2023 is that a much stronger set of demand conditions … runs the risk of resilient high inflationary expectations," he wrote in response to theThe Reserve Bank used market forecasts of a 3 per cent cash rate to underpin its latest economic forecasts, which did not have inflation falling back even to the top of its 2–3 per cent target range until the end of 2024.
"I don't think it's likely to happen because I think the Reserve Bank, once they get the cash rate to around their estimate of neutral [somewhere near 2.5 per cent], will want to pause and actually see how the economy's responding to the rate hikes that they've delivered," CBA's head of Australian economics Gareth Aird told RN Breakfast.
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