NAB Economics Iced our RBA forecas on 16 September, looking for a 50bp rate rise in October and 25bp in November before a pause. Meanwhile the Fed has hiked 75bp and indicated at least one more very large hike is likely. In general offshore central banks are becoming more candid about controlling inflation ahead of any other goals. We revise our term rate forecasts higher to reflect that the Fed is indicating an intention to take the cash rate to at least 4.5% fairly quickly. However, given the market's acceptance of the RBA pause we are expecting tighter ACGB-UST spreads. Unless RBA turns to a much more dovish tack, front yields will continue to track well above our RBA expectations, thus the long end spread is unlikely to be sustainably negative - NAB
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