### Bank Views (2/3) Westpac: The RBA is........>

RBA: ### Bank Views (2/3) Westpac: The RBA is certain to leave rates unchanged

again at its September meeting. The Bank has left the cash rate unchanged since

August last year. Over the past year, economic growth has been patchy, core

inflation is below the target band, there is significant slack in the labour

market and wages growth is at historic lows. With a number of these trends

likely to persist, we expect rates to remain on hold throughout 2017 and 2018.

However, market pricing is for one rate hike by the second half of 2018. The

2018 outlook is critical to the rates debate. The RBA's central case forecast is

for growth to accelerate to be above trend in 2018 and into 2019. We are less

convinced, expecting growth to slow to below trend in 2018.

- HSBC: We expect the RBA to remain on hold for now. We believe that above-trend

growth over the rest of the year and continued improvement in the labour market

will lead to a modest lift in inflation and wage growth. We see this paving the

way for an RBA rate hike in early 2018. RBA Governor Phil Lowe stated that it is

reasonable to assume that the 'next rate move will be up rather than down', but

that it is 'some time away if things play out as [he] expects'.