ANZ Predict Cash Rate to peak @ 5.75% by end 2012

In ANZ’s view, they  still believe that the next move in RBA rates is up, but not before Q3.  The risk to our forecast (hike to 5% in Q3, 5.25% in Q4 and up to 5.75% by end 2012) is that the RBA stays on hold for longer than we expect, or that the hikes are more drawn out than the ANZ currently expect.

Trends in job advertising continue to reveal medium-term upward pressure on rates, though anecdotes of mixed performance in some sectors and an unemployment rate tracking sideways suggest an economy currently growing around trend, which is unlikely to worry the RBA.

I think it unlikely rates will move up before the 3rd quarter. I am of the  opinion that the cash rate will peak in this cycle at 5.5%  based on current data.


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