Reserve Bank of Australia Revised its Economic Forecast

The Reserve Bank of Australia drastically revised its economic forecast on Friday. The board expects headline inflation to peak at around 6% in the second half of this year, from 3.25% in its February projection and Core inflation to top 4.75% by year-end, from 2.75%. The inflation is expected to return to the top of the 2% to 3% target range in 2024.

The labour market has improved further, and the demand for labour is strong. The unemployment rate reached 4% in recent month and therefore forecast to decline further to around 3.5% in early 2023 and this would be its lowest level in almost 50 years.

The Australian economy remains resilient and is expected to grow strongly this year. The GDP forecast is now expanding by 4.25% over 2022. Growth is expected to moderate thereafter, to 2% over 2023. The wage rate is expected to strengthen further with a fall in unemployment rate.

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