VIEW: ANZ Push Back RBA Rate Hike Call Into H124

ANZ note that "as a consequence of Delta, we don't see the combination of inflation above 2% and wages growth at 3% or higher being achieved until around mid-2023. This is some six months later than we previously expected. With the RBA wanting to see inflation sustained within the target band for a couple of quarters before it acts, we've pushed our forecast for the first rate hike into H124. Whether the taper in weekly bond purchases is delayed in September is still up in the air and will depend on how things evolve before the RBA's meeting."

• "This is still more than two weeks away, with a lot of important data to come - to say nothing on how the pandemic evolves."
• "The efforts to combat Delta will push GDP down more than 3% q/q in Q3. We have scaled back the expected rebound in Q4. This takes our expectation for growth over the year to December 2021 down to 1.4%. But we think the easing of restrictions through 2022, enabled by the vaccine rollout, will combine with fiscal and monetary stimulus to push growth to 5% next year."
• "While we see sizeable employment losses over the next few months, the hit to the labour market is expected to be much smaller than GDP might imply. We expect the unemployment rate to average 5.1% over the December quarter and then trend lower in 2022 and 2023. This is enough to delay the lift in wages growth to 3% or more until around mid-2023. In turn, this restricts inflation from moving meaningfully above 2% until that year."
• "The risks around this outlook are much larger than usual given the uncertainties in how the pandemic will play out."