Quarterly Monetary Policy Statement is out

  • Growth forecast kept roughly same
  • Says a further rise in the AUD would slow pick up in economic growth and inflation
  • Wage growth has been slow, averaging an annual rate of around 2 per cent in recent quarters, but average earnings growth has been slower still
  • Comments from previous :-Growth:Reiterated sees GDP growing around 3% for next two years; Cut 2017 GDP estimate by half percentage point to 2.0-3.0% (2.5-3.5% prior);
    Increase in employment supporting household incomes and consumption
    Inflation: Forecasted end 2017 underlying inflation (core) at 1.5-2.5% . Expected underlying inflation to reach around 2% in H2 2017, rise a little thereafter;
    Forecasted end 2018 underlying inflation (core) at 1.5-2.5% ; Forecasted underlying inflation (core) 2-3% by end of 2019 (unchanged vs prior forecast)
    Currency: Forecast based on technical assumption of A$ staying at $0.8000; Reiterated further rise in A$ would lower economic growth and inflation
  • Link to the report on the RBA website

AUDUSD 0.7680 around going into the report, trades 0.7666 on lower inflation forecast, but overall not that much of a move “so far”

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