Goldman and Commonwealth Bank disagree with interest rate forecast in Australia

Australia's leading bank, Commonwealth Bank, is of the opinion that the tightening cycle is coming to its peak, while Goldman Sachs Group Inc. believes that the increase in rates will continue until next year.

Forecasts regarding the final interest rate differ. For example, CBA expects a new increase to 3.1% next week. Goldman plans five more interest rate hikes before reaching the 4.1% mark in May. There are questions about whether the A$9.7 trillion ($6.5 trillion) housing market can withstand the most serious tightening cycle since 1994.

CBA’s representative Gareth Aird believes that continued increases in the coming year will certainly affect households, which are already overburdened by debt. This point of view is contrary to the opinion of Goldman's Andrew Boak, who believes that the savings generated during the pandemic will allow them to stay afloat.

According to Boak, chief economist for Australia at Goldman Sachs, achieving an acceptable level of inflation without causing a recession and with the condition of maintaining the housing market is a priority for Australia in the coming year. Significant increases in inflation this year have greatly reduced the chances of a soft landing.