Bond markets are continuing to bet that the RBA will have to lift rates this year, despite new government forecasts predicting inflation will fall faster than the central bank expects.
Already a subscriber?Markets are still pricing in a rate increase by the Reserve Bank of Australia this year, despite the government forecasting inflation could be back within target by Christmas.
“I have questions about how they are getting 3.5 per cent in June this year compared to the RBA’s forecast of 3.8 per cent,” Dr Oliver said.“The confusion in my mind is about how cost-of-living measures to be announced in the budget will impact inflation this financial year given it’s almost over.” Even so, while futures markets have trimmed their expectations of a rate rise in Australia this year to 19 per cent, traders still wager that the RBA’s next move in the cash rate will be up, not down.
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