The chance of a post-budget interest rate rise is rising and the Reserve Bank of Australia could lift the cash rate as soon as next month if Wednesday’s wages figures exceed expectations, amid fears that weak productivity could embed high inflation.
Money markets ascribe a 58 per cent chance of an interest rate increase by August, compared to 34 per cent last Friday and before the release of the minutes of the RBA’s May 2 board meeting on Tuesday. However, markets are pricing in just a 12 per cent chance of a move higher in June.
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Michael Read is the Financial Review's economics correspondent, reporting from the federal press gallery at Parliament House. He was previously an economist at the Reserve Bank of Australia and at UBS. Connect with Michael on Twitter. Email Michael at michael.read@afr.com
John Kehoe is economics editor at Parliament House, Canberra. He writes on economics, politics and business. John was Washington correspondent covering Donald Trump’s election. He joined the Financial Review in 2008 from Treasury. Connect with John on Twitter. Email John at jkehoe@afr.com
