Westpac are out with a note on their “more sanguine” concerns about inflation, with a much faster drop to inflation in 2023. More here:
Significant near term inflation concerns abound. Uncertainty remains high, with the outlook dominated by energy price concerns, tight labour markets and the impact of large and rapid monetary policy tightening.
The RBA expects inflation to remain on an upward track through 2022, peaking at 7.80% yoy in the December quarter before “declining back towards the 2–3 per cent range”. That decline will clearly take time, with the RBA forecast at 6.20% yoy for the next 4 quarters. (We have implied a qoq profile based on the RBA’s yoy forecasts, refer table). The WBC economics forecast is for inflation to fall much faster with our expectation 1% lower than the RBA, at 5.20%yoy through the 2nd quarter 2023)
Well the latest hikes by the RBA are definitely going to help with domestic factors on inflation, particularly discretionary spending, but the boffins at Martin Place may also get a free ride as imported energy prices take a dive:
