The case for the RBA to tighten policy is growing increasingly compelling. Underlying inflation is all but certain to overshoot its current forecast. Services inflation, which has long been a concern for the Bank, is also proving to be quite persistent. Meanwhile, the labour market has largely stopped loosening and green shoots are starting to emerge in the economy. As a result, we now expect the RBA to hike rates by another 25bp when it meets in two weeks' time.
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