Several things are obvious about Australia in 2022. House prices are going to slow sharply and commodity prices are going to fall much further. These are dovish for monetary policy but given rates are so low one could still argue that tightening will be needed.
But there is one question that you have to answer to make your final judgement. It is will immigration resume? If so then Australian interest rates will be stuck at zero as wages growth and inflation pop like a bogong moth in a bonfire. If not, then the hawks can at least argue their case.
Capital Economics is somewhere in the middle but given it doesn’t even ask the key question how can it be taken seriously? To wit:
