On May 8, Bill Evans, a veteran RBA watcher and chief economist at Westpac Bank, said there was a significant risk that the RBA would raise interest rates further from the current 3.85%.
He said that while Westpac believed the current level of the cash rate would be the peak of the cycle, the evolution of inflation and labor market outcomes posed a significant risk to moving forward with policy.
The latest information on these indicators will be released ahead of the RBA’s August policy meeting.
Westpac expects CPI inflation to fall to 6.3% in the second quarter from 7.0% in the first quarter.
But if inflation does not decelerate to an acceptable level, the RBA may see a case for raising rates further.