• We have delayed the timing of when we expect the RBA to start a gradual rate hiking cycle.
• 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.
• While still very data dependent we now have the start of the rate hiking cycle in mid-2019
• We still 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. However, we acknowledge there is considerable uncertainty around the timing at which wages growth will strengthen, and the time of the RBA’s next move will remain highly data dependent.

For further analysis download the full report:

• NAB changes rate call: May 2018 (PDF, 98.5kb)