Australia's monetary tightening will resume this year

The Reserve Bank of Australia (RBA) held its cash rate at 4.75% today, as was universally expected. Nonetheless, above-trend GDP growth still looks likely in 2011-12 and will eventually lift price pressures. We continue to expect the RBA to hike its cash rate to 5.75% by mid-2012, with the next move up coming in August or September.

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