**As seen in Risk In The Week report 03/03/23, subscribe at cablefxm.co.uk/reports
The RBA raised its Cash Rate by 25bps to 3.35% in early February, this was expected by most economists and marked the 9th consecutive rate hike delivered by the board. In the statement, the central bank said that the economy had grown stronger than expected in 2022 and that strong domestic demand is adding to inflationary pressures. Also, they stated that further rate hikes will be needed while the inflation target is not expected to be reached until mid-2025. The RBA now sees inflation at 4.75% in 2023, which would be a slowdown from the prior year 6.6% but more than double the mandate’s target. On growth, the central bank sees GDP rising by 2.25% in 2023 and 1.50% in 2024, these estimates would be a cooldown from last year's expansion, however, no recession expectations are on the table. The labour market is predicted to slowdown as the RBA now sees a jobless rate of 4.5% by mid-2025, the most recent read printed at 3.7%. Looking ahead, the RBA said that the next move in rates would depend on data and developments in the global economy. The board noted that there’s uncertainty over a slowdown in household spending. After last month’s meeting, analysts scrapped their peak rates projections to pencil a higher cost of money. The desk at RBC now sees a terminal Cash Rate at 3.85%, CBA expects hikes in March and April. Westpac's analysts note that despite the fact that the RBA decided to adopt a more flexible rate path approach in February, the minutes showed that the board is not considering a pause soon, they add that it would be very surprising if the RBA paused in March. Westpac will be focusing in the statement wording for further colour on the rate trajectory.
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