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The Reserve Bank of Australia repeated its warning of more interest rate rises after lifting its inflation forecasts for 2023 amid elevated price pressures, while also raising its growth forecast for the first half of 2023, according to the Statement on Monetary Policy released Friday.
The bank lifted its forecast for the Consumer Price Index to 6.75% for June, up from 6.25%, and inflation is expected to ease to 4.75% by December. CPI is forecast to return to 3% by mid-2025. The trimmed mean was raised to 6.25% for June, up from 5.5%, and lifted to 4.25% for December compared to 3.75%.
"Inflation could turn out to be higher than expected if the high inflation environment leads to greater feedback between wages and prices than has been typical in the inflation targeting era. On the other hand, inflation could be lower than expected if the easing in goods inflation is faster or more widespread than anticipated," the RBA said.
The economy is expected to grow at a 2.25% y/y pace by June, up from 2% y/y in the November SMP. Forecasts for 2024 were maintained. The RBA's first growth forecast for 2025 sees growth rebounding slightly to 1.75% y/y in June.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.