Justin had the headlines on this on Friday: We expect the RBA will begin it's tightening cycle in Q1 of 2023
- By then, we expect that the conditions for that first rate increase around full employment and inflation will have been met while wages growth will be close to 3%.
You'll recall that the Reserve Bank of Australia have been repeating (over and over) that they expect the conditions for a first rate hike will not be met until 2024 at the earliest.
WPAC say Thursday's job report was significant:
- a major 'game changer' for policy
- underscores the strength of momentum in the economy
- endorses the range of other measures pointing to a very strong labour market
- The recovery is now clearly into a self-sustaining upswing and the need for emergency stimulus policies has eased significantly
WPAC projections for a rate hike cycle:
- an increase of 15 basis points in Q123
- to be followed by 25 basis points in Q223
- and 25 basis points in Q423
- That would restore the cash rate to 75 basis points by end 2023, in effect reversing the 'emergency' rate cuts seen in 2020
As a ps. ANZ shifted their forecast for an RBA rate hike to 2023 also, even earlier last week:
And, after the jobs report ANZ is considering moving their rate hike projection even sooner:
- The labour market is tightening faster than we expected, potentially pressuring our call for a rate hike in H2 2023.
Thursday's job report was a blockbuster, ICYMI:
- Australian May Employment Change +115.2K (expected +30K) & Unemployment Rate: 5.1% (expected 5.5%)
- Australia's 'stunning' jobs report, wage pressure 'will only grow'
RBA boss Lowe: