National Australia Bank CEO Ross McEwan predicts ’one or two’ more cash rate rises

NAB chief Ross McEwan predicts one or two more cash rate rises and says the RBA needs to get to the top of the cycle soon so people ‘know where their money is going’.

Australia was likely to avoid a recession but people will be feeling as though things are getting a lot harder, NAB chief executive Ross McEwan said.

National Australia Bank chief executive Ross McEwan said there’s likely to be “one or two” official cash rate rises on the horizon as the Reserve Bank seeks to curb inflation.

But he urged the central bank should be aiming to get to the peak rate position as soon as possible because the uncertainty around the outlook for rates was hurting confidence.

“We need to get to the top of the cycle so people get certainty and know where their money is going. And I think that’s the biggest thing that’s worrying households,” the NAB chief executive said on ABC radio earlier Thursday.

Australia was likely to avoid a recession but people will be feeling as though things are getting a lot harder, he added.

The Reserve Bank is attempting to get inflation under control. Picture: NCA NewsWire / Jeremy Piper

Minutes from the RBA’s May board meeting showed a “finely balanced” decision to lift the cash rate by another 25 basis points to a decade high of 3.85 per cent that surprised most economists was made in the context of inflation forecasts that “left little room for upside surprises to inflation”.

NAB’s house economists expect the cash rate to hit 4.1 per cent with upside to 4.35 per cent.

McEwan also reiterated comments at NAB’s recent half year earnings presentation that the bank is only seeing small numbers of borrowers facing difficulty because of higher interest rates.

He noted the bank recently reached out to 7000 of its customers which it assessed would be most impacted by the higher mortgage rates. Of those only 13 customers said they need some help with their loans.

“At this stage households are adjusting – it’s not easy though. And we’re very, very aware of that,” McEwan said.

With figures released this week showing wages growth across Australia was pushing 4 per cent, McEwan said this would be helpful to households. But it was inflation that needed to be brought under control because that impacts everybody.

The RBA has said it is monitoring wages growth to ensure it doesn’t add to inflationary pressures through the economy. While further growth in wages is expected to follow, forecast rising unemployment as the economy slows and higher immigration levels should ease cost side pressure on inflation.

“The main aim is to get rid of inflation so that the people aren’t having these costs running through everyday into their household budgets.

“You know, it was good to see that wages were starting to come up. We need to get all businesses much more productive so the wage increases can be passed through without creating inflation”.

“And it’s been talked about this where we’re just not seeing that in businesses around Australia. We’re just not getting the productivity up. That’s the key and then we can share those productivity gains through wages,” he told ABC.

“Because if we keep everybody keeps up with inflation, we’re going to keep inflation going. Which comes back to we’ve got to get productivity in our businesses and then the wages can go up higher than they are today,” McEwan said.

Australia’s wage price index excluding bonuses rose at a decade-high annual pace of 3.7 per cent in the year to March, versus an upwardly revised 3.4 per cent in the December quarter. On a quarterly basis, wages rose by 0.8 per cent.

Originally published as National Australia Bank CEO Ross McEwan predicts ’one or two’ more cash rate rises