The Reserve Bank of Australia could push interest rates as high as 3.6 per cent by February as it scrambles to get high inflation under control, according to Morgan Stanley. The rates market is even more hawkish.
Rising global rates expectations signal that “global inflation is likely to persist” and that “domestic inflation pressures will require a larger demand contraction to come under control”, he said.“With expectations for global rates moving higher, we think a further shift towards inflation management is likely.
It also expects the labour market to weaken from the first quarter of next year, raising its year-end 2023 forecast for unemployment to 4.2 per cent from 3.9 per cent. although three BoE officials pushed for the institution to join its global peers in moving at an even quicker pace.Central banks in Norway, Switzerland, Sweden, South Africa, the Philippines, Indonesia and Taiwan also joined in.
'Most of Australia’s inflationary pressures are supply driven. So, address the problem directly by lowering the cost of domestic energy supply. It isn’t rocket science.'
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