WPAC had expected a +25bp rate hike in July, which they still expect, but add in:
- We now expect a further final increase in the cash rate of
0.25% to 4.6% at the August Board meeting, for a peak in the
cycle of 4.6%.
In their reasoning WPAC cite:
- The May Labour Force Survey tips the balance on our
August call. It showed an increase in employment of 76,000, outstripping even our top-of-the range forecast for a 40,000
bounce - The stronger
rebound means we now have average growth of 36,000 jobs
over the two months – around the monthly pace we have seen
over the past year, indicating no significant slowing of jobs
growth despite the RBA’s 400 basis points of tightening over
the same period. - The evidence of strong ongoing momentum in
the labour market is sufficient to trigger the “considerable risk”
of an August rate hike in our central forecast.
Current Reserve Bank of Australia cash rate:
Earlier:
–
AUD little changed.