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Economists agree that the Reserve Bank will probably hike interest rates again by at least 25 basis points when it meets towards the end of July, after inflation expectations for the second quarter of 2023 went up to 6.5%, outside the bank’s target range of 3% to 6%.
At 6.5%, inflation expectations are 2 percentage points higher than the Reserve Bank’s sweet spot of 4.5%. Although the consumer price index (CPI) is starting to come down now, it is expected to remain high, at just below 6%. This, combined with elevated inflation expectations, supports a case for another hike in interest rates, according to economists.
