HSBC argue that the Reserve Bank of Australia will lag when it comes time to tighten monetary policy:
- Citing the fact that "Inflation is ... a lot further below target than in comparable countries, such as the U.S., Canada, UK and New Zealand"
- "We see the RBA as now clearly, almost solely, focused on getting inflation back to target and expect that it will continue with its highly expansionary settings for some time yet, with the aim of running the economy hot"
Info from HSBC comes via Reuters.
HSBC acknowledge
- Australia among the most successful in handling the pandemic
- economy has emerged from the pandemic slump with strong growth momentum
- Job vacancies are at a 12-1/2 year high, nearly 50% above pre-virus levels
- unemployment is close to where it was before the pandemic
- consumer spending, house prices booming
- indicators of consumer and business confidence are positive
However:
- wage growth and inflation are at all-time lows and well below the RBA's target
RBA target band for CPI (core) is 2 to 3%
- at present though its circa 1.1%
- the RBA has repeatedly said it sees its targets for inflation and unemployment to be not met prior to 2024 at the earliest
RBA Gov Lowe:
