CBA: Peak of 3.85% by May 2023, then dropping to 2.85% by May 2024. Westpac: Peak of 3.60% by March 2023, then dropping to 2.35% by May 2025. NAB: Peak of 3.60% by March 2023, then dropping to 3.10% by May 2024.
1) Interest-rate forecast.
We project a year-end 2023 federal-funds rate of 4.75%, falling to about 2.00% by the end of 2024. Further out, our 2026 and long-run projection for the fed-funds rate and 10-year Treasury yield are 1.75% and 2.75%, respectively.
Since inflation is slowing, experts predict Australia's interest rates will reach 3.6 percent in March 2023 and will remain the same until the end of the year. By March 2024, rates should begin to decrease and should decline to 2.85 percent by 2024.
The variable introductory rate is currently 4.25% p.a. (increasing to 4.50% p.a. from 12 May 2023), which includes a fixed bonus margin currently at 2.40% p.a. (increasing to 2.55% p.a. from 12 May 2023) above the NetBank Saver standard variable interest rate, currently 1.85% p.a. (increasing to 1.95% p.a. from 12 May ...
So far in 2023, the Fed raised rates 0.25 percentage points twice. If they hike rates at the May meeting, it is likely to be another 0.25% jump, meaning interest rates will have increased by 0.75% in 2023, up to 5.25%.
The predictions made by the various analysts and banks provide insight into what the financial markets anticipate for interest rates over the next few years. Based on recent data, Trading Economics predicts a rise to 5% in 2023 before falling back down to 4.25% in 2024 and 3.25% in 2025.
Mortgage Bankers Association (MBA).
“Long-term rates have already peaked. We expect that 30-year mortgage rates will end 2023 at 5.2%.”
The big four banks have all cast their predictions for the next few years of cash rate movements. For the average owner-occupier paying a variable rate, your home loan rate could reach 6.86% in 2023.
The total rate increase for 2023 so far is 0.75% per annum, with the RBA deciding to increase the cash rate by 0.25% per annum in February, March and May (no changes announced in January and April).
Following the Reserve Bank of Australia's (RBA) decision yesterday to raise the official cash rate by 25 basis points to 3.85%, NAB will make changes to its rates. NAB's standard variable home loan interest rate will increase by 0.25% p.a., effective from 12 May 2023.
In the long-term, the Australia Interest Rate is projected to trend around 3.10 percent in 2024 and 2.60 percent in 2025, according to our econometric models. In Australia, interest rates decisions are taken by the Reserve Bank of Australia's Board. The official interest rate is the cash rate.
NAB: NAB predicts that the cash rate will remain at its current peak of 3.85% and will stay there for the remainder of the year, before falling again t0 3.35% by March 2024. NAB expects the cash rate to fall a further 25 basis points to 3.10 by June 2024, and stay at that level for the rest of the year.
In Australia, the monthly CPI indicator for January published last week provided support to the idea that headline inflation has also peaked in Australia (Graph 7). This monthly indicator is still experimental and can be volatile from month to month, so some caution is required.
Interest rates will slide to 2.85 per cent by the middle of 2024, Mr Aird added.
Westpac predicts the cash rate will peak at 3.85 per cent after a hike at the May meeting, and stay there for the second half of 2023, with rates coming down in the first quarter of 2024. Westpac economists expect the cash rate to fall to 2.35 per cent by mid-2025.
Likewise, a low cash rate results in low interest rates on these products, which is good for borrowers but not for savers. As things stand, Australia's current cash rate is 3.85%.
Experts from the big four banks predict the dust will settle with an official cash rate peak between 3.85% and 4.10% – so getting there means even more rate hikes loom in the first half of 2023.
The next RBA Board meeting and Official Cash Rate announcement will be on the 6th June 2023. As at 3 May, the ASX 30 Day Interbank Cash Rate Futures June 2023 contract was trading at 96.165, indicating a 0% expectation of an interest rate increase to 4.10% at the next RBA Board meeting.
Both estimates are largely in line with fresh projections from officials in March. The Fed penciled in a 5-5.25 percent peak interest rate for 2023, after which officials see rates falling to 4.25-4.5 percent by the end of 2024.
The annualized variable rate of 3.38% is based on inflation running at 1.69% from September 2022 to March 2023, and represents a significant decline from recent previous rates. Starting in May 2023, Series I bonds will earn a minimum interest rate of 3.38% according to newly released U.S. inflation data.
They provide insight into interest rate forecasts over 5 years. An interest rate forecast by Trading Economics, as of 2 March, predicted that the Fed Funds Rate could hit 5% in 2023, before falling back to 4.25% in 2024 and 3.25% in 2025.
These futures can also be short-term or long-term. Short-term interest rate futures have an underlying instrument with a maturity of less than one year, while long-term interest rate futures have an underlying instrument with a maturity of over one year.
In the long-term, the Australia Consumer Price Index (CPI) is projected to trend around 139.71 points in 2024 and 142.92 points in 2025, according to our econometric models.
Source: Roy Morgan Single Source: December 2022, n=5,964. Base: Australians 14+. A look at Inflation Expectations on a State-based level bringing together the Country Regions and Capital Cities in each State shows the measure was highest in South Australia at 6.4%, just ahead of both Queensland and Tasmania at 6.3%.