National Australia Bank is the latest lender to change its prediction about the next rise in the official interest rate. It had originally predicted a rise in November 2018, but now expects a 25-basis-point increase in mid-2019.
The bank’s economists say the change reflects the fact there is “no sign yet of stronger wages growth and unemployment has been stuck around 5.5% for the best part of a year”.
Earlier last month, AMP Capital chief economist Shane Oliver revealed he didn’t expect the RBA to lift rates until 2020 at the earliest, while on 1 May, Westpac chief economist Bill Evans said: “Westpac continues to expect that the cash rate will remain on hold in 2018 and 2019.”
In its latest note to clients, NAB’s economists said they expect the economy to strengthen, leading to a declining unemployment rate.
“This should eventually translate into stronger wages growth and give the RBA confidence that inflation will track back to its 2.5% target,” the economists said.
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