The Reserve Bank of New Zealand delivered the 50bp rate hike we were anticipating this week and we think that the Reserve Bank of Australia will embark on its own tightening cycle in June. With the labour market continuing to tighten and business surveys suggesting that inflation may rise far more sharply than both we and the RBA are anticipating, the risks to our forecast that rates will peak at 1.75% are firmly tilted to the upside.
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