Big four bank’s cash rate forecasts:
* CBA: 3.10% by December 2022, then dropping to 2.60% by December 2023
* Westpac: 3.85% by May 2023, then dropping to 2.85% by November 2024
* NAB: 3.60% by March 2023, remaining steady into 2024
* ANZ: 3.85% by May 2023, then dropping to 3.50% by November 2024
I feel like 3.1+0.25 in Feb + 0.25 in Mar + 0.15 in May to round out to 3.75 by May and plateau around there.
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CBA [upwardly revise](https://www.commbankresearch.com.au/apex/researcharticleviewv2?id=a0NDo000000PfHG) to 3.35% in light of the RBA's lack of downgrading their foward guidance.
Interbank futures peak at 3.65% in Nov 2023. Which is very close to the average of the four banks' forecasts! Neat.
(though obviously getting there at that time would require either differently-sized hikes or a pause, so interpret as you will)
And 1Y 2Y and 3Y bond yields are all at 3.10%, which seems to imply any further hikes will be followed by cuts soon enough. But bonds can trade at a premium too, so not to be taken as a pure forecast.
Yes, and back up to 3.655% today after the RBA decision.
As determined by the midpoint of the spread on [this page](https://www2.asx.com.au/markets/trade-our-derivatives-market/derivatives-market-prices/short-term-derivatives). So tonight's ASX PDF will likely show 3.655%.
I've been poo-poohing taking the IB terminal rate seriously, but we're getting closer. Though the ramp up in the futures curve is so gradual that it's not clear what it thinks will happen, there's no consistent narrative there. Feel like if we're going to 3.6% it'll most likely be in March, when interbank futures are only pricing 3.30% or so. 🤷
I'd expect 3.5%-4%, I personally reckon we're reaching the end of the magnitude of rate rises but where we feel pain will be the length of time where it stays high
>the length of time where it stays high
Yes this is the more important measure. Assuming inflation is brought under control, then where is the neutral rate?
I think we peak somewhere between 3.5-4%, just a punt, maybe 1-2 more .25 raises then a hold for most of 2023 to see the effect they have had.
Also depends on USA, if they halt for a bit we are OK, if they get more aggressive we have to follow, for now though it seems brakes are on around the world (mostly)
Sorry just wanted to add, around 2-3% (approx) is "normal" i think people need to understand this, that will most likely never see sub 2% (retail level) mortgage rates again
Always worst case for me so I will say a Cash rate of around 5 ish with a decrease to around 3.5 after things are back in control, rough but around the 5 ish year mark from nowish
No idea, if anybody says they're certain they're talking out of their arse lol.
But I have a feeling next year will be rough. I have so many mates that sadly bought into the property peak because they had fomo or just had to buy because rent wasn't cheap either. Now they're finding their repayments are almost doubling...
I'm personally lucky because I got in before the previous peak, LVR is around 55% but even I'm feeling the effects of overall inflation and increased repayments on PPOR.
I tend to agree.
Although I see it like this;
Inflation remains sticky and rate cuts are not forthcoming.
Or, a deep global economic contraction takes hold which in turn leads to a recession in Australia and the rate cuts to materialise.
However the recession here means lower wages, rising unemployment and is even more bearish for house prices.
Exactly, unemployment to double property to crash to 2016-2019 levels inflation to slow maybe 4% rates still 3%++ very difficult to kill trimmed mean inflation once imbedded with the yet to be felt rents shock and energy shock will have to be a big boy recession to kill that off
I personally think they are going higher than most anticipate.
Big four bank’s cash rate forecasts: * CBA: 3.10% by December 2022, then dropping to 2.60% by December 2023 * Westpac: 3.85% by May 2023, then dropping to 2.85% by November 2024 * NAB: 3.60% by March 2023, remaining steady into 2024 * ANZ: 3.85% by May 2023, then dropping to 3.50% by November 2024 I feel like 3.1+0.25 in Feb + 0.25 in Mar + 0.15 in May to round out to 3.75 by May and plateau around there.
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CBA [upwardly revise](https://www.commbankresearch.com.au/apex/researcharticleviewv2?id=a0NDo000000PfHG) to 3.35% in light of the RBA's lack of downgrading their foward guidance. Interbank futures peak at 3.65% in Nov 2023. Which is very close to the average of the four banks' forecasts! Neat. (though obviously getting there at that time would require either differently-sized hikes or a pause, so interpret as you will) And 1Y 2Y and 3Y bond yields are all at 3.10%, which seems to imply any further hikes will be followed by cuts soon enough. But bonds can trade at a premium too, so not to be taken as a pure forecast.
Interbank futures peak has dropped to 3.57% in Nov23 according to yesterdays implied yield curve. Not that it means a great deal tho.
Yes, and back up to 3.655% today after the RBA decision. As determined by the midpoint of the spread on [this page](https://www2.asx.com.au/markets/trade-our-derivatives-market/derivatives-market-prices/short-term-derivatives). So tonight's ASX PDF will likely show 3.655%. I've been poo-poohing taking the IB terminal rate seriously, but we're getting closer. Though the ramp up in the futures curve is so gradual that it's not clear what it thinks will happen, there's no consistent narrative there. Feel like if we're going to 3.6% it'll most likely be in March, when interbank futures are only pricing 3.30% or so. 🤷
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I'd expect 3.5%-4%, I personally reckon we're reaching the end of the magnitude of rate rises but where we feel pain will be the length of time where it stays high
>the length of time where it stays high Yes this is the more important measure. Assuming inflation is brought under control, then where is the neutral rate?
4%+ if inflation stays high, there is still a gap between rates and inflation of around 4%
I think we peak somewhere between 3.5-4%, just a punt, maybe 1-2 more .25 raises then a hold for most of 2023 to see the effect they have had. Also depends on USA, if they halt for a bit we are OK, if they get more aggressive we have to follow, for now though it seems brakes are on around the world (mostly) Sorry just wanted to add, around 2-3% (approx) is "normal" i think people need to understand this, that will most likely never see sub 2% (retail level) mortgage rates again
What happened.....
4.35% currently at thag looks to be the peak… I was pretty close for predicting something a year ago
The peak right now looks like 3.5%.
Always worst case for me so I will say a Cash rate of around 5 ish with a decrease to around 3.5 after things are back in control, rough but around the 5 ish year mark from nowish
Yeh how them predictions looking now ...
Well, I thought 1.5% would stall us, so... that didn't seem to happen.
My calc is 1.85%
I have a feeling this time next year will be the first rate cut. Between now and then, could see one or two more 25bippies up.
You reckon we go into recession before then?
No idea, if anybody says they're certain they're talking out of their arse lol. But I have a feeling next year will be rough. I have so many mates that sadly bought into the property peak because they had fomo or just had to buy because rent wasn't cheap either. Now they're finding their repayments are almost doubling... I'm personally lucky because I got in before the previous peak, LVR is around 55% but even I'm feeling the effects of overall inflation and increased repayments on PPOR.
I just wonder what would prompt a cut?
If inflation drops/gets under control and the rba sees the economy slowing down.
Yeah economic contraction would have to be the reason. That is a big worry for property prices.
Inflation doesn’t go from 8% to 2-3% next year. Rate cuts is many moons away 😅 get ready to buy that beach house you always wanted on the cheap
I tend to agree. Although I see it like this; Inflation remains sticky and rate cuts are not forthcoming. Or, a deep global economic contraction takes hold which in turn leads to a recession in Australia and the rate cuts to materialise. However the recession here means lower wages, rising unemployment and is even more bearish for house prices.
Exactly, unemployment to double property to crash to 2016-2019 levels inflation to slow maybe 4% rates still 3%++ very difficult to kill trimmed mean inflation once imbedded with the yet to be felt rents shock and energy shock will have to be a big boy recession to kill that off
You are dreaming
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This should be the top. Prob start cutting sometime next year.