Morgan Stanley: The Australian central bank's return to tight monetary policy measures will be effective.

Morgan Stanley said that the measures taken by the Reserve Bank of Australia to return to a tighter monetary policy should help cool the country's economy. The bank emphasized that signs indicate that the RBA's more hawkish communication and actions have already had an impact. Economist Chris Read stated that since November last year, consumer sentiment, non-essential spending, and housing price growth have all slowed down. Fiscal policy also appears to be tightening. The Australian federal government has announced plans to introduce a restrictive budget in May, which may include measures to increase investment taxes. Morgan Stanley noted that high oil prices will further squeeze growth. Morgan Stanley stated: "All of this suggests that while inflation will continue to rise in the short term, the likelihood of a significant slowdown in economic growth in the second half of 2026 seems more likely." The bank predicts a GDP growth rate of 1.6% for 2026, well below the average expectation of 2.2%.