“We do not expect the war to lead to a significant downgrade to the global economic outlook, though there are risks in Europe. Our view is there is not a long term impact on the Australian dollar from the Ukraine war and we see the AUD/USD strengthening during 2022 in response to significantly higher energy and metal commodity prices.”
CBA Chief Economist Stephen Halmarick said the bank’s economics team maintains its forecast that the Reserve Bank of Australia will increase the official cash rate for the first time this year in June.
“We believe Q1 2022 wages numbers and next CPI print will meet the RBA’s criteria for raising interest rates sooner than expected by many people. The strength of commodity prices is one reason why we expect the value of the Australian dollar will increase.”
Mr Halmarick also said sustainability research was a key focus for the bank’s Global Economic & Markets Research team.
“Our Sustainable Economics output is a key focus as we look to support Australia’s transition to lower emissions. Put simply, every unit of GDP needs to use less carbon. High energy prices could act as a driver for a quicker move to renewable energy generation.”
Also speaking at the event, CBA’s Head of Australian Economics, Gareth Aird, said the bank held the view that Victorian dwelling prices had peaked and that the housing market nationally would weaken by around 8 per cent in 2023.
CBA’s FX research is available to clients via the GEMR website