
Australian shares fell sharply this week, with the ASX 200 down 3.8%. Strong economic data and hawkish commentary from the RBA pushed markets to reassess the near term path of interest rates. GDP grew 0.8% for the quarter and 2.6% over the year, suggesting the economy is running above supply capacity. However, a slowdown in household consumption compared with RBA forecasts raised concerns about demand momentum. While unit labour costs eased slightly, weak productivity, high public sector spending and ongoing supply constraints continue to make the inflation outlook more complicated.
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