CommBank expects rate rise in October
Commonwealth Bank of Australia (ASX: CBA), the nation's biggest mortgage lender, has joined an increasing number of banks in revising forecasts for an interest rate hike to October.
CommBank chief economist Michael Blythe, however, does not anticipate the lift in cash rate to happen in three consecutive monthly moves that characterised its first two stages in winding back monetary policy from the "emergency" rate of 3 per cent.
"The timing of a subsequent move will depend on the reaction to the October rise and the subsequent flow of data," he said.
Mr Blythe predicts the cash rate will eventually peak at 6 per cent following further rate rise through 2011.
Financial markets are pricing in about a 60 per cent chance of a 25-basis-points hike in the official cash when the RBA board meets on October 5.
CommBank previously predicted the RBA will hold off until November and after the September quarter consumer price index (CPI) that is scheduled for release on October 27.
Yesterday, National Australia Bank Ltd (ASX:NAB) also said it forecasts the Reserve Bank of Australia will lift its official cash rate to 4.75 per cent next month, rather than early next year.
" ... We are bringing forward the timing of the next 25 basis point rate rise from early 2011 to the central bank's next board meeting on October 5," NAB said.
Speculation of an imminent rate rise came after RBA Governor Glenn Stevens gave a speech Monday in rural Victoria saying the biggest resources boom since the 19th century will spur the economy and monetary policy will have to play its part in containing the upswing.
Hawkish comments in the minutes of RBA's September 7 meeting released on Tuesday also pointed to a rate increase.
The RBA raised the cash rate three times between October and December in 2009 followed by a further three moves between March and May.