Australia’s gross domestic product (GDP) experienced robust growth in the fourth quarter, rising by 0.8 per cent. This figure surpasses the upwardly revised 0.5 per cent growth recorded in the previous three-month period and exceeds the Reuters consensus forecast of 0.6 per cent. The year-on-year expansion of the economy reached 2.6 per cent, a notable increase from the 2.1 per cent recorded in the third quarter. This also exceeded the consensus forecast of 2.2 per cent.
The Reserve Bank of Australia (RBA) has expressed concerns about the economy potentially overheating, which could exacerbate existing inflationary pressures. Current inflation levels are already significantly above the central bank’s target range of 2 per cent to 3 per cent. The RBA had previously forecast GDP growth of 2.1 per cent by June.
Recent acceleration in inflation towards the end of the previous year has surprised both the market and the central bank. RBA Governor Michele Bullock recently indicated that all upcoming policy meetings are being considered for potential rate adjustments. Market expectations currently suggest a 33 per cent probability of a rate increase at the March 17 meeting, with a rate hike fully priced in by May.
Looking ahead, Deputy Governor Andrew Hauser is scheduled to speak in New York on Friday (Saturday AEDT). His comments will be closely scrutinised for further insights into the RBA’s outlook and potential policy responses.
