National Australia Bank: Still expects RBA to raise interest rates by 25 basis points by August

News on May 17, National Australia Bank economist Nugent said Australia’s wage growth figures for the first quarter were not a major surprise to the RBA‘s latest forecast. The figures are likely to give the RBA more confidence in its reading that wage growth is stabilizing.

On the face of it, this could see the RBA viewing Australia’s wage outlook as a point of departure from other major economies and keeping it on the sidelines in June. However, the RBA’s inflation expectations remain at risk, with the National Australia Bank still expecting the RBA to raise the cash rate by another 25 basis points by August, or a hike in July.