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Trade Deficit Wider Than Expected


Growth Rate Closer To 2%-2.5%


Sigh Of Relief

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RBA: VIEW: On Wednesday TD Securities altered their call for cash rate hike in
May 2019, noting that "with wages growth picking up, we remain of the view that
interest rates can be lifted off the floor in due course. However, as the
glacial pick-up continues, the RBA is expected to remain patient for longer. The
RBA needs higher wage growth so households can manage higher interest rates,
even if the tightening cycle is likely to be very modest by historical
standards. In addition, higher income growth provides a valuable offset to
declining asset prices, i.e. the housing and equity market correction that is
currently underway. The Dec qtr WPI report is released 15 February 2019, and the
Mar qtr report isn't released until after the 7 May RBA meeting and 10 May
Monetary Policy statement (on 15 May 2019). This implies that even if we are
right and wages growth is closer to 2.5%/y Q1 2019, then August is the first
opportunity to respond to wages growth closer to 'target'." Their new call looks
for a 25bp hike in November 2019.
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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