The lift to household incomes as a result of the budget is incrementally hawkish – Goldman Sachs

Having heard the details of the Australian Federal Budget on Tuesday, Goldman Sachs recently came out with hawkish hopes about the Reserve Bank of Australia’s (RBA) next move, mainly due to a likely increase in inflation.

With this, the GS forecasts another Reserve Bank of Australia rate hike in July and warns there are further to come after that.

Key analysis from GS

At a time when the RBA is lifting rates to contain elevated inflation and accelerating labor costs, we assess the budget’s near-term boost to household incomes to have an incrementally hawkish read-through for monetary policy.

Especially given surging migration-led population growth and the recent strong rebound in house prices, we see a firming case for further policy tightening by the RBA over the coming months.

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