Most analysts I've seen since the Reserve Bank of Australia raised its cash rate yesterday and sounded a more hawkish tone, saying “further increases in interest rates will be needed over the months ahead”, are tipping at least two more cash rate hikes soon.

AMP's Head of Investment Strategy and Economics and Chief Economist is less hawkish.

In the wake of the statement yesterday Oliver said via Twitter:

  • I continue to see rates as being at or close to the top. Ultimately the RBA will driven by data & there are increasing signs of slowing demand and easing inflation pressures with Aust inf lagging the US by ~6mths.

In further comments today (this in summary) he is forecasting:

  • We remain of the view the cash rate is near the top as: rate hikes impact with a lag; inflationary pressures are easing globally & showing signs of easing here too; the sharp rise in household interest payments will weigh on spending; and there is increasing evidence rate hikes are getting traction.
  • But given the RBA’s more hawkish tone we are allowing for one more 0.25% hike in March followed by a pause ahead of the start of rate cuts late this year or early next year.

And provides this look at the recent rate hike path compared with others:

rba rate hike cycles 08 February 2023

The Reserve Bank of Australia is going to eyeing incoming CPI and labour market data keenly. Labour market tightness should soon decline given new efforts at boosting immigration. As for inflation, I suspect some of the heat will come out of it head but it'll be some time before it falls back to the RBA's 2 to 3% target band.

The next official inflation data is for the month of January, due from the Australian Bureau of Statistics on March 1. The December month CPI was a shockingly high 8.4%.