RBA SoMP: Feb rate cut to support demand, lowers 2015 GDP forecast

Ivan Delgado Independent Analyst

FXStreet (Bali) - The RBA Quarterly Statement on Monetary Policy has been published, including a more in-depth assessment of the economic outlook, both domestic and international, together with an updated view on inflation, employment figures and the value of the Aussie.

Key headlines - via Reuters

Feb rate cut to support demand, provides no forward guidance

A$ above most estimates of fair value, providing less aid to economy than it could

Growth to be below trend for longer, spare capacity to last for some time yet

Lowers gdp forecast for 2015 by 0.25 ppt, similar cut to underlying inflation out to 2016

y/y gdp seen at 2.25-3.25 pct end 2015, 3-4 pct end 2016, 3-4.5 pct by june 2017

Underlying inflation seen at 2.25 pct mid 2015, 2-3 pct end 2015 out to june 2017

Unemployment to rise bit further, peak later than anticipated

Abs data, liaison suggests mining investment could fall by more than 10 pct in 2014/15

Non-mining investment still subdued, pick-up to occur later than previously expected

Housing market will need to be watched carefully, regulators working to contain risks

Fall in petrol prices likely to subtract 0.5 ppt from cpi in q1, boost household incomes

Ramp up in lng output slower than expected, still add 0.75 ppt to gdp in 2016/17

Uncertainties include outlook for commodity prices, divergent global monetary trends

China growth projected at or little below 7 pct in 2015, property market a key uncertainty

Author

Ivan Delgado

Independent Analyst

Established in the Asian continent since 2009, Ivan studied a degree in Business at the University Pompeu Fabra (Barcelona), while also earning a postgraduate degree in Business Administration.

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