📝Expect Lower Growth In Australia But Not A Recession: RBC

As in other countries, consumer confidence has fallen sharply with rising borrowing costs and high inflation dampening any positive senti- ment around a strong labour market. A moderation in consumer spending and further pullback in housing are central to our forecast for GDP growth to slow to 1.5% next year from 3.6% this year. The RBA hiked by another 25 bps in December and left its forward guidance un- changed, suggesting it has no intention to pause its tightening cycle in the near term. Howev- er, the statement noted “substantial” tightening already delivered and lags in monetary policy transmission, in our view indicating a more data dependent approach with monetary policy now in restrictive territory. We look for a further 50 bps of hikes in Q1/23 but see the RBA pausing thereafter as the Australian economy’s recent resilience begins to fade. - RBC