VIEW: NAB: No Clear Impetus From The Data For Other Action

In lieu of the RBA’s December meeting minutes NAB note that “perhaps like Fed Chairman Powell mused last week, the RBA is becoming more concerned with the destination than the journey. There are conflicting pressures emerging - Australia’s lagged wages increases at the same time as goods inflation and growth moderate globally. Together, these saw the RBA Board consider a rate pause in December, (and also increases of 25bps and 50bps), but the arguments in favour of a further 25bps increase won out and the Board again signalled the likelihood of further increases in interest rates being required in the period ahead. NAB expects that the December quarter CPI (January) and November WPI data (February) will confirm the case for further 25bps increases at the February and March Board meetings, but it seems likely we are approaching a pause - and possible peak - in cash rate rises in the next few months at 3.6%. The impact of the previous significant phase of interest rate rises is likely to be increasingly visible in the economy through 2023 and as a result we have pencilled in modest easing in Australian monetary policy in H1 2024 as the RBA unwinds some of the restriction put in place.”