RBC note that “Today’s June labour force report was extremely strong from the headline print through to all the underlying details. This is an increasingly tight labour market possibly already beyond full employment which will keep pressure on the RBA to get to neutral sooner rather than later and think about restrictive territory. Coupled with the global trend to front load with the BoC delivering a 100bp hike overnight, markets will likely price in something between 50-75bp for the 2 August RBA meeting. With the advantage of more frequent (monthly) meetings, we stick with our current profile for +50bp in Aug and Sept followed by +25bp in Oct and Nov to see cash at 2.85% by year end. We would not, however, rule out +75bp in August, and indeed, think it prudent to move more quickly but suspect the RBA may opt for a more measured approach.”
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