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What do the big banks have to say about budget 2022?

What do the big banks have to say about budget 2022?

Hot on the heels of the federal budget for 2022/23, Australia’s big four banks have responded with their own economic forecasts. 

Some of the highlights of budget 2022 were cost of living support measures, including one-off cash payments and tax offsets, as well as halving the fuel excise tax for six months. Deposit guarantee schemes to support housing were also extended and expanded to include more places for regional property purchases.


ANZ described the economic forecasts underpinning budget 2022 as “reasonable, though perhaps still a little conservative.”

ANZ chief economist, Richard Yetsenga, said that the challenging conditions surrounding this budget, such as the recent pandemic, European conflict, inflation cycle and upcoming election, all seem to have influenced the budget.

“In the detail of the budget you can see some of that context. Cost of living pressures are reflected in tax cuts and fuel excise cuts. There are efforts to improve women’s participation in the labour market and the quality of the roles they take. And there are some measures to help address the climate challenge.”

ANZ’s research indicates that unemployment may fall even more than the government expects, with the government forecasting 3.75 per cent unemployment and ANZ forecasting 3.3 per cent. Wages may also rise faster and higher, with ANZ forecasting 3.8 per cent wage growth by next financial year, compared to the government’s estimate of 3.25 per cent in the same period.

ANZ Research also expects the RBA cash rate to reach 2.0 per cent by the end of 2023, indicating that there are risks that interest costs could end up higher than forecast in the budget.

Commonwealth Bank

Economists from the Commonwealth Bank of Australia (CBA) described the budget 2022 as a pre-election budget, with money for cost of living pressures. That said, there is a risk that these cost of living payments could “add to near-term demand and inflation pressures in an economy where rising inflation is already a concern.”

The government’s economic forecasts were found to be close to those of the CBA team. For example, the government forecast an unemployment rate of 3.75 per cent, compared to CBA’s predicted 3.8 per cent.  

There was also nothing in the budget to change CBA’s forecast that the RBA will begin raising the national cash rate from June 2022, to peak at 1.25% in early 2023.

CBA chief economist, Stephen Halmarick, described the budget as “both a pre-election Budget and a new phase in the Government’s fiscal strategy focused on stabilising the debt built up supporting the country during COVID-19.”

“The Budget reflects the robust state of the Australian economy and its rapid bounce back after the economic impact of the policies designed to slow the spread of COVID.”


NAB group chief economist, Alan Oster, said that while the budget’s focus on spending for cost of living measures was expected, there is considerable uncertainty over how many of the budget’s announced measures are likely to be implemented, with an election coming up.

“Overall, we have no problem with the focus on maintaining the support for economic growth but we see the scope for more structural/productivity enhancing measures to have been included. Cutting red tape, tax changes and greater support for renewable energy would have been preferred.”

Both the Treasury and NAB were found to have similar views on the economic outlook, forecasting growth of 3.8% in 2022/23, compared to Treasury’s 3.5%. That said, NAB is forecasting unemployment of 3.5% in 2022/23, compared to Treasury’s 3.75%.

Budget 2022 also didn’t change NAB’s monetary policy forecasts, with the bank still predicting that the RBA will start raising rates by August 2022.


Westpac economic spokesperson, Bill Evans, said that “the government’s measured stimulus program is to be applauded, striking a responsible balance between fiscal repair and new policy initiatives, as they head to the polls.”

“We do not believe that this stimulus program will sway the Reserve Bank away from its current plans to remain patient with respect to interest rates.”

Westpac’s budget analysis found that the economic forecasts in budget 2022 moved broadly into line with its own, though some may appear to be too cautious. For example, while the government has forecast economic growth of 3.5%, Westpac’s forecasts come in at a much higher 5.8%. It noted that pent-up demand from households that have been accumulating savings over the past two years of lockdowns points to potentially stronger consumer spending than what’s factored into the budget forecasts.

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This article was reviewed by Personal Finance Editor Georgia Brown before it was published as part of RateCity's Fact Check process.



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