CBA forecast RBA will lift cash rate in late 2022

The Commonwealth Bank’s head of Australian economics, Gareth Aird has forecast the RBA will lift cash rate in 2022, about two years earlier than the central bank has itself suggested.

“Our central scenario has the RBA delivering the first hike in the cash rate in November 2022,” Aird advised in a note to clients.

“We have pencilled in an increase of 15 basis points, which would take the cash rate to 0.25 per cent.

“We expect that to be followed by an increase of 25 basis points in December 2022. 

"We have three further 25-basis-point hikes in Q1 23, Q2 23 and Q3 23 [the first, second and third quarters of 2023].”

It would take the cash rate to 1.25 per cent, where it was in June 2019.

But it depends on fiscal policy remaining expansionary and the border opening to immigrants in mid-2022, Aird added.

Variable mortgage rates after a 1.15-percentage-point rise would move from 3.1 percent to 4.25 per cent for owner occupiers and from 3.44 to 4.59 per cent for investors.

On a $500,000 mortgage it would result in a $324 per month increase in repayments.

Aird is the latest economist to bring forward their timing forecast as ANZ's economists recently advised their forecast was for the first rate rise to come in late 2023.

Westpac shifted its first rate rise forecast to March 2023 after the recent job numbers.