It was obviously a technical bounce after a very weak run, which was always the risk.
Fundamentally, we believe that at this point in the cycle, after one year of sub-trend growth and facing the prospect of one to two more years of the same, and with inflation peaking, the bank shouldn't be tightening policy further.
But we aren't in charge of the policy lever.
Capacity pressures remain tight.
We're still looking for an easing later this year.
Inflation is going to remain in the top half of the target range and (it's) all very consistent with monetary policy needing to remain relatively tight for some time.
One more rate hike late this month is a sure thing, but further tightening is data dependent.
But that is no longer the case after such a prolonged and significant increase.
With the economy growing below potential, labor market indicators probably continued to ease. The survey should be relatively friendly for those expecting easier monetary policy later in the year.
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