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RBA to hike in May, no rate cuts until 2025

We expect the Reserve Bank of Australia to hike rates by 25bp at its meeting next week, in contrast to the consensus view that the Bank will remain on hold. Given the RBA’s ostensible resolve to return inflation to target within a reasonable timeframe, it can ill afford to look past the upside surprises in the latest CPI and labour market data. Along these lines, we have also pushed back our forecast for the first rate cut from Q4 2024 to Q1 2025.

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