Both economists and the Reserve Bank of Australia (RBA) have maintained their position in their respective economic forecasts after a strong post-Delta recovery.
In that quarter Statement on monetary policy (SOMP), the RBA, said the economy was recovering strongly after the blockade of Delta and the impact on Omicron’s spending was “relatively small.”
The central bank also upgraded its economic and inflation forecasts and lowered its unemployment forecasts, eventually falling below 4%.
“Australia is on its way to recovery, surpassing all major advanced economies, supported by the Morrison government’s economic plans to continue to hire businesses and Australians during the greatest economic shock since the Great Depression. “Masu,” Finance Minister Josh Frydenberg told AAP.
The statement reiterated that the board was “patience-prepared” and overlooked how various factors affecting Australia’s inflation evolved before raising interest rates.
This includes keeping an eye on wage growth, but the contact says it is not expected to exceed the 2-3 percent range this year. The December Quarterly Wage Price Index (WPI) will be published on February 23.
Westpac’s chief economist, Bill Evans, said there was a “serious labor shortage” in the pockets of the economy, while business liaisons didn’t expect wage growth to exceed a few percent. Said it was amazing.
“Westpac expects WPI growth to reach 3.3% in 2022 and 3.5% in 2023. [Reserve] Bank forecasts at SOMP. ” Said..
However, economists have not changed their previous expectations that the first cash rate hike will take place later this year.
Commonwealth Bank economists believe that there is a “significant range” in which inflation and wage data for the first half of 2022 will be stronger than RBA forecasts.
“This makes us happy with our call for the RBA to start raising cash rates in August 2022,” said Gareth Aird, Dean of the Australian Economics Department. “Given that household debt levels are rising, we expect it to be a shallow, gradual tightening cycle.”
ANZ Bank economists consider the RBA to be “too pessimistic” when it comes to wages, as labor underutilization is expected to diminish and further decline according to labor market indicators. These factors indicate a further increase in wage growth.
“This is behind our expectation that the RBA will begin tightening in the second half of 2022,” said David Plank, ANZ Head of the Australian Economy. “The cash rate target will be 0.75% by the end of 2022 and will be raised to 2% by the end of 2023.”