Australia & New Zealand
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RBA to hike rates in early-2023

By tapering its bond purchases and watering down its commitment to keep its policy rate unchanged until 2024, the RBA is paving the way for interest rate hikes in 2023.
Marcel Thieliant Senior Japan, Australia & New Zealand Economist
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RBA probably won’t hike before the May election

Trimmed mean inflation will probably climb above the upper end of the RBA’s 2-3% target band in Q1, which would add to the case for the RBA to start hiking rates in May. However, the RBA hasn’t changed its policy rate in an election month since it started to announce monthly policy decisions in 2008. And with wage growth set to remain below 3% for now, we expect the Bank to wait until August.  

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The rapid tightening of the labour market coupled with the acceleration in underlying inflation will prompt the Reserve Bank of Australia to end its asset purchases at its meeting on Tuesday 1st February. And we now expect the Bank to hike rates to 1.25% by end-2023, with the first hike coming in August. Drop-In (08:00 GMT, 26th Jan): Will the RBA follow the Fed this year? Economists from our Australia and Markets services will talk through the likely path of RBA policy making in 2022 and the implications for Australian bond and currency markets. Register here.

25 January 2022

Australia & New Zealand Data Response

Australia Consumer Prices (Q4 2021)

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25 January 2022

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While export values hit a record high in May, this was largely driven by soaring export prices and export volumes probably dropped back. However, we think that the drag from net trade on GDP growth will fade before long as import volumes come off the boil.

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