Bank of America note that “RBA Governor Lowe has effectively ruled out the possibility of 75bp hikes at upcoming meetings. Similar to the June meeting, the Bank would decide between 25bp and 50bp next week, depending on the economic data available at the time. Domestic data have been sufficient to support our view for a 50bp hike next week. Labor market outcomes for May suggest there is scope for unemployment to fall further below 4%. Importantly, inflation is far from peaking, where we see headline rising to 9.2% by the year-end vs. the RBA's 7%. Yet, fiscal policy is set to remain stimulatory across states despite the risk of fuelling inflation even further, especially after the 5.2% lift to minimum wages.”
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