**As seen in Risk In The Week report 07/01/2022, subscribe at cablefxm.co.uk/reports
Early in June, the RBA delivered a 50bps Cash Rate hike, this was above what market participants were waiting for. The central bank said it was ready to move further as inflation is expected to be persistent, they also backed their decision to move by 50bps given the current price pressures. The RBA said unemployment is expected to decrease further and that Australia macroeconomic settings were supportive of growth. On their outlook, the board mentioned this was highly sensitive to the Ukraine crisis as energy and agriculture prices were affected. The central bank now sees 2022 CPI at 3.25% and 2023 CPI at 2.75%, real GDP growth is expected at 5.50% in 2022 and at 2.50% in 2023. Almost all economists surveyed by Bloomberg see the Cash Rate lifted by 50bps to 1.35% next week, the median sees the rate at 2.50% by year-end, Goldman Sachs, Deutsche Bank, and Nomura see the target above 3.0% by end-2022. The desk at Westpac expects the rate moving to 1.85% by August, they project a peak at 2.6% by February 2023. Westpac notes that the labour market stands at the tightest level in 50 years, and that inflation is expected to rise by around 7% this year.
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