NAB calls June RBA hike to 4.60% as Middle East inflation compounds domestic pressures
At a Glance
The desk anticipates a rate hike from the RBA to 4.60% in June, driven by escalating inflation pressures both domestically and from the Middle East conflict. Per the full note source, NAB's analysis highlights that the RBA cannot afford to let inflation run unchecked, especially following a significant rise in purchase costs reported in their March Business Survey. This view diverges sharply from peers like ING and CBA, who expect a pause after the recent hike to 4.35%. The upcoming RBA meeting on June 15-16 will be pivotal in determining market sentiment around these forecasts.
Full Analysis
What the desk is arguing
The desk posits that the RBA will raise the cash rate to 4.60% in June, a move prompted by compounding inflationary pressures. Per the full note source, NAB emphasizes that the central bank faces dual inflation challenges: pre-existing domestic capacity constraints and new pressures from the Middle East conflict.
Supporting this view, NAB's March Business Survey indicated the largest single-month increase in purchase costs in nearly thirty years, suggesting businesses are compelled to pass these costs onto consumers. This data point underscores the urgency for the RBA to act before inflation expectations become entrenched.
Where it sits in our coverage
Our consensus target for the AUD is 1.075, with a range of 1.04 to 1.12. Key firms include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26) - citi: 1.12 (Mar26)
This outlook aligns with NAB's more hawkish stance, which sits at the upper end of the consensus range, contrasting with the more dovish perspectives from ING and CBA, who anticipate a pause in rate hikes.
How other firms see it
Firms like ING and CBA are aligned in their expectation that the RBA will pause after the recent hike, arguing that the May decision marked the beginning of a wait-and-see approach. Conversely, NAB stands out by forecasting an additional hike, reflecting a more aggressive stance on inflation management.
Watch the AUD/USD trajectory closely, as it could be influenced by the RBA's decisions and the evolving situation in the Middle East, particularly regarding oil prices and inflation expectations.
What the calendar says
With the RBA meeting scheduled for June 15-16, this event will be crucial for assessing market reactions to NAB's revised forecasts and the potential for further tightening in monetary policy.
From the original
National Australia Bank now expects the RBA to hike again in June to 4.60%, arguing the central bank faces a compounding inflation shock it cannot afford to let run, with cuts pencilled in for H2 2027. Earlier: ING sees AUD rebound ahead as RBA signals pause but stands ready to a
Related speeches
4 itemsCiti reiterate forecast for a 25bp RBA rate hike at the Bank's August meeting.
ING sees AUD rebound ahead as RBA signals pause but stands ready to act
The desk believes the Australian dollar (AUD) is poised for a rebound following its recent weakness post-RBA decision, as the Reserve Bank of Australia (RBA) maintains a hawkish stance despite signaling a pause in rate hikes. Per the full note from ING, the RBA raised the cash rate to 4.35% with an 8-1 vote, indicating a strong consensus among board members. While GDP growth forecasts were cut to 1.3% for 2026, the RBA's readiness to act if inflation surprises to the upside suggests that the AUD could find support in the near term.