'Clearly a possibility': Even dovish economists think the RBA is ready to hike rates
Top forecasters are quickly changing their tune and tipping a February rate rise.
Australia's most dovish economists are considering whether rate rises are back on the cards for February following a surprisingly solid increase in jobs growth in December.
UBS, HSBC and the Bank of America moved expectations of a rate cut forward to February after the release of data on Thursday showing the unemployment rate declined to 4.1% in December, severing faith in expectations the labour market is easing.
Westpac chief economist Luci Ellis, a former Reserve Bank assistant governor, has been anticipating a softening in the jobs market. However, her team is now “open to a changed interpretation” that the labour market will not soften this year as consumer spending remains elevated.
Speaking to Capital Brief, Ellis said “at the moment, we think it’s a bit less than 50/50” that the RBA’s monetary policy board raises interest rates at its February meeting, “but it is clearly a possibility". Any clear view on interest rates will depend on consumer inflation data, she stressed, with December figures due to be published next Wednesday.
