RBA SoMP: Cuts near term outlook on growth, more upbeat further out

Ivan Delgado Independent Analyst

The RBA’s quarterly Statement on Monetary Policy (SoMP) has been published, with the Central Bank trimming its GDP outlook near term., while showing more optimism further out.

Key headlines - via Reuters

Cuts GDP forecast for June 2017 by 1 ppt to 1.5-2.5 pct, December unchanged at 2.5-3.5 pct, June 2019 2.75-3.75 pct

Forecasts underlying inflation at 1.75 pct June 2017, 1.5-2.5 pct out to December 2018, 2-3 pct by June 2019

Judged holding policy steady consistent with growth, inflation targets

An appreciating AUD could complicate economy's transition

RBA includes new forecasts for unemployment, sees 5.75 pct mid-2017 and 5-6 pct out to mid-2019

Says economy unlikely to grow fast enough to pull jobless rate down

Says GDP growth looks to have rebounded in Q4, weakness in q3 was temporary

Says subdued growth in household income is expected to constrain consumption growth

Says surveys, liaison with firms suggest wage growth will not slow any further

Says inflation shows signs of having stabilised, to increase gradually over time

Forecasts assume recent jump in terms of trade, commodity prices will unwind over next two years

Says expansion in LNG exports to add 0.5 ppt to GDP in both 2017 and 2018

Global economy entered 2017 with more momentum than earlier expected

China growth stronger than expected, high and rising debt a medium term risk

Says significant uncertainty around policy in the united states

Risk US protectionist policies could harm global growth

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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