RBA is upbeat, expecting GDP growth to pick up gradually - TDS

Analysts at TDS explain that the RBA Minutes from the 7th March meeting confirm the RBA’s reluctance to cut the cash rate with the RBA needing to balance an optimistic outlook on the domestic and global economy against growing imbalances/risks in the housing market.

Key Quotes

“Overall the RBA is upbeat, expecting GDP growth to pick up gradually, downplaying the recent capex miss, but is aware that low interest rates are driving a pick-up in borrowing and build up in housing risks. Given the Bank mentions a higher AUD as potentially complicating the transition post the mining boom, rate hikes appear unlikely anytime soon, particularly with spare capacity and wage pressures remaining subdued.”

“Housing data came in strong today, with Dec qtr House prices gaining, at +7.7%/yr (mkt: 6.3%).”