Westpac economists tip first RBA rate hike as soon as August

SYDNEY, Jan 20 (Reuters) - Australia’s central bank could raise interest rates as soon as August as a pick up in inflation and wage growth outweighs the drag on economic activity from a surge in coronavirus cases, analysts at Westpac Bank said on Thursday.

Westpac’s chief economist Bill Evans said the Omicron outbreak would have its major impact on the economy in January but expected growth to bounce back strongly once the peak of cases had passed.

“Our forecast revisions reflect a much faster lift in inflation and wages growth than envisaged,” said Evans. “We now expect one hike of 15 basis points in August to be followed by a further hike of 25 basis points in October.”

Westpac had previously forecast a first rate hike would not come until February 2023. The Reserve Bank of Australia (RBA) has repeatedly said a rate rise was unlikely during 2022 given wages and inflation were lagging much of the developed world.

Reporting by Wayne Cole Editing by Chris Reese