VIEW: Westpac: RBA Board Considered Pause In December

In light of the release of the minutes from the RBA’s December decision Westpac note that they “expect the economy to slow through 2023 with “stagnation” in the second half but some momentum extending into 2023.”

• “When the Board comes to consider its options at the next meeting in February it will have the December quarter Inflation Report but will also be observing data for the holiday period that may be holding up better than expected.”
• “Based on the analysis in the minutes, that will set the scene for hikes in both February and March (December quarter Wages Report available for the March meeting) while the May meeting will also be confronted with uncomfortably high inflation for the March quarter and a central bank that is observing tight labour markets and rising wages pressures.”
• “A hike in May will be appropriate following other central banks, who will already be on hold, and the clear evidence of the economic damage builds - time to pause at the June meeting for the rest of the year.”