Traders are betting the Australian economy may have bigger hurdles ahead than the Reserve Bank of Australia has forecast.
Already a subscriber?Bond investors are predicting the Australian economy will weaken much faster than forecast by the Reserve Bank of Australia, but some experts argue that fears of dramatic job losses are overblown.
“It comes down to whether you think that the economy is coming to a hard landing or a soft landing,” Andrew Lilley, chief rate strategist at Barrenjoey said. A hard landing in Australia is when the unemployment rate climbs near 5 per cent – from 4.2 per cent currently, he said., the strategist does not believe the unemployment rate will “punch through” the 4.5 per cent mark and he predicts a soft landing.
Warren Hogan, chief economist at Judo Bank, believes the three-year bond yield should be around 4 per cent, disputing the market’s assessment of the downward inflation path. More importantly, policymakers don’t expect it to return sustainably to the band until late 2026 – one reason theySince then, RBA officials have been running an extensive jawboning campaign, ruling out easing this year because inflation was still too high. Population growth is partly responsible for the high cost of living and strong job creation this year.
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