After a period where the RBA was seen to be on hold for the foreseeable future and so yield direction was driven by offshore developments, domestic fundamentals are now back in focus. The RBA Governor recently highlighted three factors that will place an obstacle to a future a rate hike: low wage growth, low inflation and a strong Australian dollar.
With GDP, employment and inflation all under the microscope, economists are changing their forecasts for monetary policy based on their view for these domestic fundamentals. Financial market pricing still has one RBA rate increase now fully priced in by July/August next year.
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