ANZ revises interest rate call – how high could they really go?

There's a belief we're underestimating how high interest rates will go. 

ANZ has revised its forecast for the next six months, now predicting three hikes to the Official Cash Rate, bringing rates from 2.75% to 3.5%. 

Independent Economics Commentator Tony Alexander told Mike Hosking they'll likely climb even higher, sitting somewhere between 4% and 4.5%.  

He says the Reserve Bank predicts that the economic growth rate will accelerate, the unemployment rate will fall, and as a result, inflation will eventually fall from 4.1% to around 2%, which doesn't really add up. 

Alexander says everyone, including people like him, always underestimate how high interest rates will go during the tightening phase of a monetary policy cycle.  

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