We expect Australia’s GDP to surpass its pre-virus trend as soon as this quarter and to keep expanding at a robust pace thereafter. While wage growth will accelerate only gradually, we expect inflation to surge to 5% by the middle of this year. That forecast is well above the analyst consensus and the RBA’s forecasts. Accordingly, the 175bp of RBA rate hikes that we anticipate is well above the consensus, too, though not quite as aggressive as what the financial markets are pricing in.
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