RBA set to hike aggressively this year

The minutes of the  RBA’s April meeting show that it is coming around to our view that rates will need to be hiked before long. We expect next week’s Q1 CPI data to show inflation surpassing 4%, which will be enough to convince the Bank to hike rates in June. What’s more, we now think the RBA will hike rates to 1.75% by the end of this year and to 2.5% in 2023. Indeed, we think the Bank will hike rates at every meeting from June this year. But the RBA’s more frequent meeting schedule means it will not need to follow the RBNZ’s lead and hike rates by 50bp at any meeting.