Australia Raises Inflation, Wages Outlook, Sees Higher Rates
- RBA forecasts based on cash rate peaking at 3.75% this year
- Central bank wary of wage-price spiral risk, watching closely
The Reserve Bank of Australia (RBA) building in Sydney.
Photographer: Brent Lewin/BloombergThis article is for subscribers only.
Australia’s central bank boosted its forecast for core inflation this year and is trying to ensure the economy avoids a wage-price spiral, underscoring the need for even higher interest rates.
The Reserve Bank predicted trimmed mean inflation at 6.25% in the year-ended June, up from 5.5% previously, its quarterly Statement on Monetary Policy showed Friday. The measure is then likely to ease to 4.25% in December. Wages are expected to climb above 4% in June and peak at 4.25% later this year.