Via WPAC on thier outlook for the Reserve Bank of Australia:
Going forward we now expect 25 basis point increments in December; February; March and May.
We have not changed our growth forecasts for 2023 (1.0%) and 2024 (2.0%). The growth momentum in the first half of 2023, while still slowing, is likely to be faster than the second half of 2023 where growth could stall completely.
The Board does recognise the risks of embedding inflation psychology in the system “The Board will continue to pay close attention to the evolution of labour costs and the price setting behaviour of firms.” The final paragraph continues to emphasise that “The size and timing of interest rate increases will continue to be determined by the incoming data and the outlook for inflation and the labour market.” Based on the decision to hold the increase to 0.25% at the November meeting this “incoming data” condition looks to be a very high hurdle.
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WPAC forecasts for AUD/USD:
