Forecast for a +25bp RBA cash rate increase due to "ongoing inflation and wages concerns"

A forecast for the Reserve Bank of Australia monetary policy decision due Tuesday, 6 June 2023 at 2.30pm local time

• 0430 GMT and 1230 US Eastern time

AMP is tipping a +25bp cash rate hike citing:

• The Fair Work Commission’s decision to increase award rates of pay by 5.75% and the still tight labour market means its looking increasingly likely that wages growth (now running at 3.7%yoy) will push beyond the 3 to 4% comfort zone
• This is at a time when productivity is very poor adding to the risk of further upwards pressure on unit labour costs.
• So following the April inflation data and the further step in minimum and award wages growth, the risk is now very high that ongoing inflation and wages concerns will see the RBA overtighten and knock the economy off the narrow path.

Adds that if the RBA does hold today then the hike will come at the July meeting.

-

ps. While April inflation Read this Term (data is linked above) stayed high the indication we received yesterday for May inflation suggests it didn't just stay high, it had a renewed surge higher.

Earlier:

• ANZ, CBA, NAB & Westpac all expect Reserve Bank of Australia pause at next week's meeting

• ANZ raise its forecast for the RBA terminal rate to 4.35% (from 4.10%)

• National Australia Bank expect a +25bp rate hike from the RBA, but not until August

• Reserve Bank of Australia policy meeting tomorrow - preview

• Bank of America Reserve Bank of Australia preview - expect cash rate to be left unchanged

And Greg has the AUD techs here:

• AUDUSD sets the 50% midpoint as topside resistance...again.