Analysts at NAB suggest that stronger employment, GDP and investment data have seen them revise their forecasts lower for unemployment, and slightly increase their forecasts for GDP growth and inflation of Australian economy.
“While we remain cautious about aspects of the economic outlook, we now believe the labour market will strengthen enough to allow the RBA to remove some of the emergency stimulus currently in place. We are pencilling in rate rises of 25bps in August and November of 2018 and a further two 25bp hikes in 2019, although the precise path will be data dependent. A cash rate of 2½% by end-19 is still well below the RBA’s estimates of neutral (~3.5% nominal), suggesting monetary policy will remain supportive of the economy."
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