The ANZ said last night’s federal Budget delivered more spending than anticipated with $40 billion of new spending over five years, but much of it in 2022-23.

“This adds to demand at a time when the economy is already strong,” the bank’s economics team said.

“When the Reserve Bank starts to hike, we expect it to move with some vigour and the cash rate to reach 2 per cent by the end of 2023.

The subsequent increase in mortgage repayments would come just as taxpayers get the benefit from the $450 tax offset announced in last night’s Budget.

Before the Budget was handed down, IG market analyst Kyle Rodda said the markets were pricing in six rate hikes from the RBA before the end of the year and a cash rate above 1.75 per cent.

“Any hand out from the government will likely just fuel inflation and a more hawkish RBA,” he said.

The Commonwealth Bank said the extra stimulus to the economy from the Budget was “relatively muted”.

“However, given rising inflation and strong employment and wages growth, we maintain our view that the Reserve Bank will raise interest rates in the near term, with an initial increase to .25 per cent expected in June this year, rising to a peak of 1.25 per cent in early 2023,” the bank said.

Australians were not likely to get too much benefit from wage increases which were forecast in the Budget to rise 2.75 per cent in the second quarter of this year and 3.25 per cent in the third quarter.

However, inflation was expected to rise but significantly more than that.

A significant plus for Queensland’s economy was that the price of coal was expected to remain high.

“We think the disruption to Russian coking coal exports, (which account for 10 per cent of the seaborne market) will take years to replace fully, helping keep a premium entrenched in coking coal prices over the the Budget’s outlook period,” the CBA said.