ANZ Now Expects 25 Basis Points Hike in May

MT Newswires Live02-26

ANZ said it now expects the Reserve Bank of Australia (RBA) to hike the official cash rate by 25 basis points in May, according to a report published by the bank on Thursday.

While the January consumer price inflation data still points to a 0.8% quarterly trimmed mean inflation, the risks are now skewed to the upside and not the downside, the bank said as it added that it expects the cash rate to remain at 4.1% for an extended period after that.

ANZ said that the case for a May move looks less clear than markets imply, with trimmed mean inflation trending lower and household spending slowing, and yearly growth in this series has fallen to 5% after December's decline and revisions from 6.3% at the February RBA meeting.

ANZ noted the RBA's Monetary Policy Board prefers to adjust policy at Statement on Monetary Policy meetings following quarterly consumer price inflation releases, and recent communication suggests no urgency to raise rates further.

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