The RBA is coming around to the view that rates will need to be hiked this year. And our forecast that inflation will continue to surprise the Bank in the months ahead is why we think it will start its hiking cycle in August. That will see debt servicing costs rise to their highest level in years so we now think Australian house prices will begin falling in the first half of next year. Meanwhile, the further decline in the unemployment rate in New Zealand in Q4 means that the RBNZ will keep hiking rates aggressively but we still expect the Bank to pause in the second half of the year as higher interest rates weigh on activity.
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