Judo Bank boss Warren Hogan declares Reserve Bank will hike interest rates three times this year - and he was right about 2023

The Judo Bank is now forecasting the Reserve Bank will raise interest rates three times in 2024 to levels unseen in 16 years.

The bank's chief economic adviser Warren Hogan predicts the cash rate will climb to 5.1 per cent by Christmas, up from an existing 12-year high of 4.35 per cent. 

This would see the Reserve Bank of Australia cash rate reach a level last seen in December 2008 during the Global Financial Crisis. 

Until Wednesday, the likes of the Commonwealth Bank were forecasting three rate cuts in 2024 but higher-than-expected inflation data, released on Wednesday, has made economists re-evaluate their forecasts.

While annual headline inflation in the March quarter fell to 3.6 per cent, an underlying measure of inflation showed prices still surging by 4.4 per cent.

This is well above the Reserve Bank's 2 to 3 per cent target. 

Mr Hogan, a former chief economist at ANZ, said inflation was higher than the Reserve Bank was expecting, despite most Australian borrowers being on a variable rate mortgage.

'They were hoping we could do less than the rest of the world because we were more exposed to the nominal channel of monetary policy through variable rate mortgages,' he told The Australian Financial Review.

'We just need to now get up to the [cash rate] level that other countries are, at 5 per cent.'

Even with three rate rises, an Australia cash rate at 5.1 per cent would still be lower than New Zealand's 5.5 per cent and Canada's 5 per cent. 

Australian borrowers have already endured 13 rate rises in 18 months, between May 2022 and November 2023, and they were already the most aggressive hikes since 1989. 

Mr Hogan is one of the few economists to still be predicting more rate rises.

In November, a month before the Commonwealth Bank updated its forecasts to predict six rate cuts in 2024 and 2025, former Reserve Bank board member Warwick McKibbin was forecasting three more rate hikes.