RBA has reached its peak target cash rate at 4.10% – TDS

The RBA's August Statement and its Statement on Monetary Policy delivered a message that implied the Bank believes it is at or very close to a peak in the target cash rate, economists at TD Securities report.

At or very close to peak

Should the labour market remain firm and there is evidence that higher labour costs are being passed through, this lays the ground for the RBA to hike in Nov. But only time will tell. For now, we have the RBA cash rate peaking at its current 4.10% level but acknowledge upside risk to this forecast. The upside risks come from higher property prices supporting consumption (through the wealth channel) and higher Oil prices.

Given our view the RBA cash rate peaks earlier and lower than our prior 4.85% forecast, the RBA is therefore expected to keep the cash rate on hold for longer. We now push out rate cuts from Q2 2024 to Q3 2024.