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ANZ forecasts an interest rate hike in May

Monday, Jan 22 2018
ANZ forecasts an interest rate hike in May

Next Wednesday’s CPI report is likely to show inflationary pressures in the Australian economy have stabilised, ANZ says. And that means the bank is sticking to its view that the RBA is on track to raise rates in May this year. The bank is forecasting a slight pickup in the quarterly rate of growth for headline inflation, while it expects core inflation will remain steady. The headline increase is likely to be driven by higher prices for petrol, domestic travel and tobacco.

And while the bank’s forecast for a 1.8% rise in core inflation remains below the RBA’s target range of 2-3%, ANZ senior economist Jo Masters said the numbers should lend some weight to the argument that inflationary forces are rising. “Our forecasts are in line with those published in the RBA’s Statement on Monetary Policy, and consistent with the view that inflation has stabilised and is set to gradually rise over time,” she said. “An outcome in line with our forecast will, we think, provide sufficient comfort around the inflation outlook to pave the way for a 25 basis point rate hike in May.”

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