The Saudis have significantly cut back oil production by 1.15 million barrels per day from May until the end of the year, a move that could raise prices worldwide and feed into inflation as well as petrol prices.

Russia has also cut production and crude oil prices have already increased 7 per cent in the past week, however, the markets were also anticipating that the economic slowdown in many economies meant demand for oil was also falling.

The move has markets concerned but for now there was an expectation that interest rates in Australia are at or near their peak. That has already fed into housing sentiment in markets like Sydney where the top end has started to show price increases.

The ANZ said the Reserve Bank was now likely to hold until August when it increases rates again by 0.25 per cent and create a peak of 3.85 per cent in the cash rate, well below its previous forecast of 4.1 per cent.

The Commonwealth Bank said the current cash rate of 3.6 per cent could be the peak rate in this cycle, but its forecast remained for one final 0.25 per cent rate hike, likely to be delivered in May, for a peak in the cash rate of 3.85 per cent which would mean that monetary policy was deeply in restrictive territory.

“The budgets of many home borrowers will be under considerable strain over the coming year. We continue to expect 0.5 per cent of rate cuts in fourth quarter of 2023 and a further 0.5 per cent of easing in the first half of 2024,” he said.

The pause by the RBA has led to an significant increase in consumer sentiment as recorded by the Westpac Melbourne Institute. It jumped 9.4 per cent in April.

Confidence was now at its highest level since June 2022 but still below the level in April before the RBA hikes started.