By Devayani Sathyan and Vivek Mishra

BENGALURU, (Reuters) – Australia’s central banks will close its longest easing period by the end the third quarter. This is according to a Reuters poll. A growing number of economists had expected a rate increase just weeks following a May federal election.

The Reserve Bank of Australia (RBA), despite the fact that its peer banks have tightened their policy including the U.S. Federal Reserve which will likely to issue multiple 50-basis point hikes this year. However, it has been watching for signs of wage inflation picking up.

Amid high expectations of higher commodity prices and tighter global supplies caused by Russia’s-Ukraine conflict, money market traders bet that the RBA will move in June. This was just weeks after May’s election.

Felicity Emmett from ANZ, senior economist wrote “The timing and election are a complication”

“While the Bank can raise rates when the evidence is compelling, regardless of the timing, (RBA governor Philip) Lowe would probably prefer that rates not be raised just before or after an electoral election.” Although the RBA cut rates in 2019, it did so just after the election. However, cutting is more appealing than hiking.

The median forecast for the RBA’s official cash rate was 0.10% to 0.50% in the March 28-31 Reuters poll. This is compared to 0.25% in a March poll.

The RBA’s future direction was a matter of disagreement for economists.

A rising number of people expected the first rate increase by June, with nine of 35 forecasting rates at 0.255% and three calling rates to 0.50% at the end of the quarter.

Nearly half (16 out of 35) respondents forecasted that rates would go up to 0.5% by September. Twelve others called for 0.2%. The rates will remain at 0.10%, according to three economists, with the other 12 forecasting a rise to 0.50% by the end of September, and the remaining four expecting the cash rate to increase to 0.75% where it was prior to the pandemic. Ten economists predicted June, and twelve said August.

Between September and November, the five remaining banks were almost evenly divided. CBA, Westpac, and NAB are all on the rise, while CBA sees a June increase, while ANZ predicts September.

Alan Oster, NAB’s chief economist, stated that “Every meeting is live starting in May.” He added, “We expect a first increase of 15 basis points to August, followed by two more hikes in 2022.”

The median forecasts indicated that the benchmark rate would increase by 0.75% before the year ends, but eight economists believe it will reach 1.00%.

Rates will rise further, reaching 1.75% at the end of the year. This is an increase from the 1.25% forecast in the last survey.

Economists believe the federal budget walks a fine line between stimulating too many people in the short term and causing them to be more anxious for the RBA’s actions.

The upside risk is that inflation will still approach 5% during Q3. We also expect the government to continue to do little to restrain demand. Marcel Thieliant of Capital Economics said that since the government has not done anything to control demand, it will be up to the RBA to reign in inflation.

Inflation would continue to rise well beyond the RBA’s target range, 2%-3.3%, according to the poll.

This was a significant improvement on the 2.5% to 2.3% forecast in January.

Australia’s economy should grow by 4.2% and 2.8% this year, respectively.

(For more stories, see the Reuters Global Long-Term Economic Outlook Polls Package: