As part of Westpac's report on the leading index (Australian March leading index records its eighth consecutive negative print) is this on the bank's projections for the May meeting of the Reserve Bank of Australia:
The Reserve Bank Board next meets on May 2. Westpac continues to forecast a further increase in the cash rate at the meeting of 0.25% to a peak of 3.85%.
The minutes from the April meeting, which saw an expected pause in rate hikes, emphasise that the Board retains a clear tightening bias.
They reveal some additional concerns around the inflation outlook, including from:
- a lift in demand emanating from the sharp rise in immigration;
- pressures in the housing market;
- and risks associated with rising wage growth, particularly in the public sector.
The minutes also set out a clear ‘checklist’ of data the Board is monitoring most closely.
Updates since the April meeting has been upbeat, but the most important data release will be the March quarter inflation report due next week, on April 26.
Reserve Bank of Australia Governor Lowe
