RBA: Bushfires, coronavirus will temporarily weigh on growth


Following are the key headlines from the February RBA monetary policy statement (via Reuters):

To ease policy if needed to support sustainable growth.

Rates to remain low for extended period.

Will monitor developments in labor markets.

Lower cash rate has put downward pressure on A$.

Low rates are boosting asset prices which should lead to increased spending.

Scenario for Australian economy to grow by 2.75% this yr; 3% next year.

Central scenario for underlying inflation to be close to 2% in 2020.

Signs of a turnaround in housing market, especially in Sydney and Melbourne.

Bushfires, coronavirus will temporarily weigh on growth.

Consumption growth expected to pick up gradually.

Unemployment expected to remain around current level for some time.

Wage growth expected to remain at current level for some time.

Too early to determine how long-lasting the impact from coronavirus will be.

China-US trade, technology dispute, coronavirus are all sources of uncertainty for global growth.

FX Implications

The Aussie dollar popped over 30-pips vs. the US dollar on the RBA's no interest rate change decision, with AUD/USD reaching a new three-day high at 0.6726.

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