ANZ: Prospects for RBA rate hike pause remain uncertain

ANZ economist Adelaide Timbrell said the RBA had some leeway in keeping the overnight cash rate unchanged in June, given Australia’s unemployment rate rose to 3.66% from 3.54% and wage growth did not accelerate in the first quarter. However, unemployment remains low enough, wages are growing fast enough, productivity growth and the labor market remain concerns for the RBA.

ANZ still forecasts that the bank’s cash rate could rise to 4.1% in August (following the RBA’s surprise hike of 25 basis points to 3.85% at its May meeting), with risks tilted toward earlier and/or more rate hikes.