Jo Masters, the chief economist at Barrenjoey, a new Australian investment bank, has shared her outlook for the Australian economy ahead of the release of its August CPI data. She spoke with Shery Ahn and Haidi Stroud-Watts on “Daybreak Australia”, a Bloomberg TV show.
Masters said that she expects the Reserve Bank of Australia (RBA) to keep the cash rate at 0.1% until 2024, despite the recent surge in inflation. She said that the RBA is focused on the labor market and wage growth, which are still below the central bank’s targets.
She also said that the RBA is unlikely to taper its bond-buying program anytime soon, as the economy faces headwinds from the ongoing lockdowns in Sydney and Melbourne, which account for about 40% of the national output.
Masters said that the RBA is confident that the inflation spike is transitory, driven by supply chain disruptions and base effects from the pandemic. She said that the underlying inflation measures, such as the trimmed mean and the weighted median, are still well below the RBA’s 2-3% target range.
Australian economy to rebound strongly in 2022
Masters said that she expects the Australian economy to rebound strongly in 2022, once the vaccination rate reaches 70-80% and the lockdowns are eased. She said that the fiscal and monetary stimulus, along with the high household savings and pent-up demand, will support a robust recovery.
She said that she expects the GDP growth to be around 4.5% in 2022, after a contraction of about 1.5% in 2021. She said that the unemployment rate will fall below 5% by the end of 2022, and wage growth will pick up gradually.
She also said that she expects the Australian dollar to appreciate against the US dollar, as the global economy recovers and commodity prices remain high. She said that she expects the AUD/USD exchange rate to reach 0.8 by mid-2022, up from around 0.73 currently.
Barrenjoey’s role in the Australian financial market
Masters also talked about Barrenjoey’s role in the Australian financial market, as a new entrant in the investment banking sector. She said that Barrenjoey aims to provide a full range of services to its clients, including advisory, capital markets, trading, research and asset management.
She said that Barrenjoey has a strong team of experienced professionals, who have worked at leading global and domestic firms. She said that Barrenjoey is backed by Barclays and Magellan Financial Group, two reputable partners who provide capital and expertise.
She also said that Barrenjoey is committed to diversity and inclusion, as well as social and environmental responsibility. She said that Barrenjoey has a 50/50 gender balance in its senior leadership team, and supports various initiatives to promote women’s empowerment, indigenous reconciliation and climate action.
