The decline in Australia's labour force in September reinforces our view that net migration is providing less of a boost to labour supply than many had anticipated. Indeed, NAB's Q3 business survey showed that firms are still contending with acute labour shortages. With labour-market bottlenecks putting upward pressure on services inflation, we expect the RBA to hand down a 25bp hike at its meeting in November. In other news, we published a detailed report this week on why we expect real equilibrium interest rates in advanced economies to rise over the coming years. Along these lines, we've revised up our long-term policy rate forecasts for both Antipodean economies.
ANZ Drop-In (25th October): Is the RBA done hiking rates? We will discuss Australia's Q3 CPI data, the near-term outlook for monetary policy, and the financial market implications of any further tightening. (Register here.)
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