Quicknote: RBA on track for soft landing in 2023
We think the RBA will move by 25bpts today but perhaps more importantly, it will change some of the wording around future rate rises. There could be one more hike in February, but that will likely be the last one before they sit back and hold throughout most of 2023.
It's too early to even talk about any cuts next year.
The balancing act by the RBA is prudent and perhaps the best managed by a central bank in the developed world. Inflation is difficult to predict and the RBA has made the case that it won't fight inflation at any cost.
It's a balance, particularly given Australian mortgage holders and their exposure to variable rates compared to the US where most mortgage holders fix long term.
Bottom line: Next year looks very different from a macro perspective with the US in a slowdown and China opening up. Australia is well placed to benefit from a cool down in the west and growth in the east.
Commodity prices will be key to balance the fiscal and monetary position. Mining investment is not yet inflationary enough to worry the RBA. Jobs and housing supply are the biggest inflationary risks and contracts to growth.