ANZ bank’s grim prediction for millions of borrowers

The bank revealed its grim prediction today, citing a previous forecast of a terminal cash rate of 4.1 per cent as “insufficient” to bring down the nation’s skyrocketing rates of inflation.

“We are moving our forecast of the RBA’s terminal cash rate to 4.35 per cent,” ANZ said.

“We no longer see 4.1 per cent as sufficient to bring inflation back to the target in reasonable time.

“We see as August most likely for a move.”

This month’s annual increase of 6.8 per cent is higher than the 6.3 per cent annual rise reported in March 2023, but is below the high of 8.4 per cent recorded in December 2022.

Michelle Marquardt, head of price statistics at the ABS, said the soaring price of fuel was primarily to blame for consistently high inflation in April.

“It’s important to note that a significant contributor to the increase in the annual movement in April was automotive fuel,” she said.

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“The halving of the fuel excise tax in April 2022, which was fully unwound in October 2022, is impacting the annual movement for April 2023.”

The meeting comes ahead of next week’s June cash rate meeting, with Lowe conceding the battle against inflation is far from over.

“I will not declare victory until victory is achieved. So, we won’t be declaring victory,” he said.

The RBA has long flagged that the inflation rate needs to return to between 2 to 3 per cent, which the RBA expects to happen in mid-2025.

Lowe said weak productivity growth is an ongoing issue for the economy, and it’s posing issues for how the RBA manages inflation.

The RBA will announce its latest statement on the cash rate next week.