After hearing details of Australia’s federal budget on Tuesday, Goldman Sachs recently came up with hawkish hopes for the Reserve Bank of Australia’s (RBA) next move, mainly due to a likely pick-up in inflation.
With that, GS predicts another RBA rate hike in July and warns that more will follow.
Key Analysis by GS
At the time when RBA rises rates to avoid increased inflation and accelerating labor costs, we assess the short-term increase in budget revenue from the budget to have a gradual hawkish reading for monetary policy.
In particular, given the surge in population growth fueled by migration and the recent strong recovery in house prices, we see further policy tightening from the RBA in the coming months.
Also read: AUD/USD is attempting to correct from the US session low