The RBA started its hiking cycle at its meeting this week. While the Governor indicated that the Bank was likely to stick to 25bp hikes in the near term, we think the Bank will hike by a larger 40bp in August after another upside surprise in the Q2 CPI data. Along with 25 bp hikes at every other meeting this year that would take rates to 2.25% by the end of this year. And we now think rates will peak at 2.75% next year, much higher than the consensus expects.
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