RBA likely to deliver another 25bps next week – Well Fargo

Next week, the Reserve Bank of Australia (RBA) is set to announce its decision on monetary policy. The market consensus is for the central bank to keep rates unchanged. However, analysts at Wells Fargo are expecting the RBA to deliver another 25 basis point rate hike.

Key quotes: 

“On the inflation front, this week's monthly CPI data showed that inflation jumped to 6.8% year-over-year in April, up from 6.3% in March, boosted by the end of a government fuel subsidy put into place in April 2022, as well as price gains in housing, food and transportation.”

“Lowe mentioned he believes risks to inflation are tilted to the upside and that the central bank is “not going to declare victory until victory’s achieved.” Overall, given that inflation dynamics remain stubbornly high in Australia, we believe the RBA will deliver another 25 bps rate hike at its June meeting to 4.10%.”