March 2023
Tomasz Woźniak 
The end-of-March forecasting for the RBA cash rate survey by finder.com.au indicates probably the last (for a while) raise in the cash rate predicted for April. Afterwards, the forecasts flatten to remain at a stable level until the end of the year.
Cash rate forecasts
The figure below presents the monthly cash rate series starting from January 2010, with the forecasts reported from April 2023 to March 2024 as the forecast mean and the 68% forecasting intervals.
The table below makes the numerical values presented in the figure more accessible.
| monthly | lower | upper | |
|---|---|---|---|
| Apr 2023 | 3.65 | 3.54 | 3.77 |
| May 2023 | 3.63 | 3.44 | 3.82 |
| Jun 2023 | 3.58 | 3.32 | 3.84 |
| Jul 2023 | 3.51 | 3.19 | 3.84 |
| Aug 2023 | 3.48 | 3.07 | 3.88 |
| Sep 2023 | 3.46 | 2.98 | 3.93 |
| Oct 2023 | 3.43 | 2.88 | 3.98 |
| Nov 2023 | 3.41 | 2.80 | 4.02 |
| Dec 2023 | 3.39 | 2.72 | 4.07 |
| Jan 2024 | 3.39 | 2.65 | 4.13 |
| Feb 2024 | 3.40 | 2.60 | 4.19 |
| Mar 2024 | 3.42 | 2.56 | 4.27 |
Survey answers
Based on the forecasts above, and the analysis of forecasts from individual models, I formed the following survey answers:
When you think the RBA will change the cash rate?
| Apr 2023 | May 2023 | Jun 2023 | Jul 2023 | Aug 2023 | Sep 2023 | Oct 2023 | Nov 2023 | Jan 2024 or later | |
|---|---|---|---|---|---|---|---|---|---|
| Increase | ✓ | ✓ | ✓ | ||||||
| Decrease |
Why do you think this?
The weighted pooled forecasts from my monthly and weekly bond yield models indicate that April is likely to be the last month with increases in interest rates. The likely values for the forecasted cash rate target in April range from 3.53 to 3.76 per cent. After this month, the predictions indicate a probable flattening of the cash rate level. The arrival of the new inflation data will be decisive regarding RBA’s decisions in the longer horizon. My forecasts are available at https://donotdespair.github.io/cash-rate-survey-forecasts/
By how much do you think the RBA will change the cash rate in the next meeting?
15 pbs
At what level do you think the cash rate will peak?
3.8%
When do you think the cash rate will peak?
May 2023
When do you expect the first cash rate cut?
June 2024
RBA’s decision
On 4 April 2023, TBA’s Board decided to leave the cash rate target unchanged at 3.6 per cent.
Forecasting system
The monthly forecasts were based on the same system of variables as the one I developed for November forecasts. The updated data is plotted below. The novelty is that, this month, I started computing the weights assigned to individual models that are proportional to the cash rate contribution to the likelihood function. These weights replace equal weighting used thus far.
