The minutes of the RBA's July meeting showed that the Board remains reluctant to declare victory in the war on inflation – a sentiment reiterated by Governor Bullock in a speech this week. We suspect that the Bank's concerns about persistent capacity pressures are overdone. Even so, risks are tilted towards a higher terminal rate than our current forecast of 2.85%.
Note: We'll be discussing the Australian Q2 CPI release and its implications for the policy outlook and financial markets in a Drop-In on Wednesday, 30th July. Register here for the 20-minute online briefing.
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