National Australia Bank group chief economist Alan Oster puts the odds of the Reserve Bank pulling off a soft landing for the economy at 60:40 – though not if it takes the official interest rate well above 3 per cent.
The predictions for the peak cash rate ranged from 2.6 per cent, tipped by CBA, SunCorp, AMP and independent economist Saul Eslake, to as high as 4 per cent, according to Vanguard.All bar one economist, SunCorp’s Paul Brennan, predicted a fourth straight 0.5 percentage point increase at next month’s RBA board meeting.
The average pay rise in the June quarter was 3.8 per cent, while wages plus bonuses grew 3.3 per cent. If the 0.5 percentage point superannuation guarantee is included, wages grew at about 3.6 per cent year-on-year. Mr Eslake, CBA’s Gareth Aird and AMP Capital’s Shane Oliver expressed similar sentiment about the outlook, which would mean a cash rate around 2.6 per cent would get the job done.
Well economists have never been wrong before
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