Big 4 agree on September cash rate hold

With the Reserve Bank of Australia (RBA) due to meet for its September monetary policy meeting, the big four banks have all called a hold in the cash rate of 4.1 per cent.

The September monetary policy meeting will mark the last decision for outgoing RBA governor Philip Lowe, as he completes his seven-year tenure with the bank. His successor Michele Bullock will assume the role of RBA governor on 18 September 2023.

Commonwealth Bank of Australia (CBA) senior economist Belinda Allen said the major bank expects the cash rate to hold for the remainder of this year, as prices, wages, and activity data “indicate no further tightening is required”.

“We do not view the meeting as a line ball call, unlike the finely balanced decisions in July and August,” Ms Allen stated.

“The data flow over the past month and the large amount of rate hikes delivered to date make it a clearer decision in September.”

However, CBA does expect the central bank to run through the case to hike and maintain a tightening bias.

Westpac chief economist Bill Evans said the bank is “confident that the board will decide to keep rates on hold”.

“Following the Board’s decision to hold rates steady at the August meeting we concluded that rates would remain on hold until the September quarter next year when the first rate cut of 0.25 per cent can be expected,” Mr Evans said.

“Since we released that forecast the data flow and the Minutes from the August meeting have provided further support to the view that rates have peaked at 4.1 per cent.”

On the back of the recent Consumer Price Index (CPI) data, ANZ economists Adam Boyton, Adelaide Timbrell, and Madeline Dunk maintained that the major bank looks for “no change in the cash rate at this month’s RBA meeting”.

“We see the broad balance of the data flow and events being unlikely to shift the Board from its on-hold stance,” ANZ’s economist team stated.

However, they noted that the post-meeting statement will likely repeat that “some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable time frame, but that will depend upon the data and the evolving assessment of risks.”

While NAB also predict a hold in tomorrow’s meeting, they remain as an outlier among the major banks in regard to where the cash rate will peak.

Despite being in agreeance for the September decision, NAB maintained the cash rate increase once more during the December monetary policy meeting to a peak of 4.35 per cent.

At the time of writing, all other major banks have called 4.1 per cent to be the official cash rate peak, with the next movements likely being rate cuts in 2024.

[RELATED: CPI at 4.9% in July: ABS]