Financial markets and economists give a 50:50 chance of a lofty cash rate increase by the Reserve Bank to rein in soaring inflation as a gas price crisis bites.
that anticipate an increase of at least 40 basis points, while Commonwealth Bank and National Australia Bank expect a 25 basis point rise.
Goldman Sachs pointed to “hawkish peer central banks and current market pricing”, in forecasting a 50 basis point rate rise, and warned the increase may be vital to support the Australian dollar. Investors, economists and analysts anticipating a 25 basis point increase on Tuesday point to the lack of evidence in the past month that would force the RBA to accelerate its policy tightening.“There has been nothing in the data flow since May to wrest them from the outlook painted at that time,” said Alan Oster, chief economist at NAB. Employment data showed wage inflation of 0.7 per cent in the quarter and 3.4 per cent over the past year, broadly in line with RBA targets.
Bond markets have also priced in the prospect of a 50 basis point rate increase in August, a forecast shared by some investors and economists preparing for a 25 basis point increase on Tuesday.
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