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VIEW: UBS Adds An Additional 25bp Rate Hike Due To IR Bill

AUSTRALIA

UBS now expects rates to peak at 3.35% in February with the risks around the forecast skewed to the upside due to possibly higher wage inflation. They have also revised down the rate cuts projected for H2 2023 to 75bp from 100bp.

  • Q1 2023 CPI, which is expected to be around 7%, feeds into the minimum wage increase scheduled for July 1. So, the risks to wage growth and thus CPI inflation are to the upside.
  • The UBS Australian forecast is contingent on its global forecasts. G7 inflation is projected to moderate to 2% next year and the Fed funds rate to be cut to 1.25% by end-2023.
    - The Australian

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