The National Australia Bank revised its expectations for the Reserve Bank of Australia's monetary policy and after it had expected a rate cut twice, it now expects the central bank to raise interest rates in August 2018 by 25 basis points, in November 2018 by 25 basis points, as well as a double rate hike in 2019.
NAB attributed the reasons to strong labor market data, GDP and investment data, which prompted them to revise their expectations of a lower for unemployment, a slight increase in GDP and inflation. They remain cautious about the economic outlook as they believe the labor market has improved enough to allow the RBA to remove some of the current monetary stimulus.
With interest rates reaching 2.5% by the end of 2019, they will remain well below the 3.5% estimates of the RBA, suggesting that monetary policy will remain supportive of the economy.
