Goldman Sachs economists offer their Reserve Bank of Australia Monetary Policy Outlook (RBA) for the next two years.
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“In the background of such a large and prolonged inflation, we were surprised by the RBA’s October decision to slow the pace of rate hikesespecially before the official interest rate reached the lower limit of its nominal “neutral rate” estimate of 3.00-4.50%.”
“Looking ahead, the higher frequency of RBA Board meetings (compared to its counterparts) gives it more choicebut we do not expect the RBA to risk falling too far behind a synchronized global tightening cycle.”
“We also suspect that the RBA review due in March 2023 will increase pressure on the RBA to deliver on its inflation mandate and make it uncomfortable for the RBA to hold policy until the first half of 2023 while inflation is likely to be so far ahead. above the target.”
“Considering all this, now we expect a rate hike of 25 basis points each month until May 2023 (inclusive) – up to a terminal rate of 4.10% (before: 3.60%)- followed by an easing of 110 basis points during 2024 to 3.0%.“
Source: Fx Street
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