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Australia Set to Raise Rates as Tightening Cycle Approaches End

  • Australia’s peak rate forecast at 3.6%, New Zealand sees 5.5%
  • Wage growth, inflation expectations key factors in difference

Australia is set to raise interest rates as it closes in on the end of its tightening cycle, while nearby New Zealand just delivered a record hike and is poised to move higher, underscoring different central bank outlooks at year’s end.

All-but one economist sees the Reserve Bank of Australia hiking by a quarter-percentage point to 3.1% on Tuesday, with the sole exception forecasting a 15 basis-point move. Some economists expect the RBA to pause in 2023, while others see a couple more hikes, reflecting its aim to cool inflation without slowing the economy too much.