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Hawkish RBA will continue to tighten well into 2023

The RBA didn’t respond to the upside surprise in Q3 inflation with a renewed 50bp hike this week as some had anticipated. But by revising up its inflation forecasts and sounding increasingly concerned about the risk of a wage-price spiral, the Bank signalled that it is far from done. Meanwhile, the resilience of New Zealand’s labour market last quarter coupled with still red-hot price pressures should encourage the Bank to hike rates by 75bp in a couple of weeks.

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