2022 hikes
After the strong employment numbers, CBA now sees the cash rate rising to 2.60 per cent by November - while also predicting a terminal cash rate for this cycle of 2.60 per cent.
This trajectory means 50 basis points of hikes are coming in both August and September, before a probable pause in October.
Source: CBA
CBA sees a 'neutral' cash rate as being around 1.50 per cent.
This is expected to be a significantly contractionary setting, then, to be followed by 50 basis points of cuts in the second half of 2023.
In the short term, data is expected to keep running hot, while the forward-looking indicators continue to deteriorate sharply (consumer sentiment is already deeply pessimistic).
Headline inflation is expected to peak at above 6 per cent, according to CBA Chief Economist Gareth Aird.
