AUSTRALIA VIEW: Barclays recently pushed out their...>

AUSTRALIA VIEW: Barclays recently pushed out their RBA rate hike call to H119

from H218, on low wage growth & downside inflation surprises, which they exp. to

result in a cautious RBA bias despite the healthy job market & improving econ.

- Barclays believe that "for the RBA to change its policy stance three

conditions need to be met: 1) unemployment rate needs to fall closer to 5%; 2)

wage growth needs to pick up to 2.5-3.0% by end-18; 3) underlying and headline

inflation need to rise toward the middle of the RBA's target range.

- While a continuation of recent trends in unemployment and inflation suggest

conditions 1) & 3) will eventually be met, higher wage growth remains contingent

on increased hours worked & growth in full-time jobs, for which recent data have

been mixed. While encouraging signs are evident in the enterprise wage

bargaining agreements data, we think it is too early to call this a trend."

- Barclays suggest that "a possible rate hike in Nov 18 is a risk to our

outlook, but for the RBA to consider a move this year, a material improvement in

the labour market & a sustained rise in inflation would be needed - which are

both low probability events."