Revised outlook for RBA rates: two additional increases, peak at 4.85%, followed by a delayed cut

Updated RBA Policy Forecast

Our latest assessment of the Reserve Bank of Australia's policy direction now includes two additional rate increases in the near future, and delays the anticipated easing of rates. We are projecting 25 basis point rises at both the June 16 and August 11 meetings, on top of the 25 basis point increase already anticipated for May. This would bring the expected peak of the cash rate to 4.85%.

This adjustment is based on our updated baseline scenario, which assumes a more prolonged disruption and slower normalization of fuel supplies. Specifically, the Strait of Hormuz is expected to remain largely inaccessible for approximately eight weeks, with a gradual return to normal traffic thereafter.