RBA set to raise rates by 0.25% in March, with another increase anticipated in May

Updated Outlook on RBA Policy

We have adjusted our expectations regarding the Reserve Bank of Australia's monetary policy, now anticipating 25 basis point rate increases in both March and May. While a single rate hike remains a possibility, it is no longer our primary scenario.

• Our revised forecast projects 25bp rate rises in March and May, differing from our earlier assumption of just one increase in May and treating further hikes as only a potential risk. The predicted peak for the cash rate is now 4.35%.
• Although surging oil prices are having a significant, yet short-lived, impact on headline inflation, the RBA Monetary Policy Board is likely to respond, particularly since the negative effects on market sentiment and financial stability have been limited so far.
• Our perspective has shifted due to several key developments and new information.