RBA SoMP: Expect no revisions to growth forecasts - HSBC

Analysts at HSBC offer a brief preview of Friday’s Reserve Bank of Australia’s (RBA) Statement of Monetary Policy (SoMP) due at 0030 GMT.

Key Quotes:

“We doubt that the RBA will revise up its growth forecasts, and expect them to be the same as the last set - with 3.25% growth expected in 2018 and 2019, slowing to 3.0% by 2020. However, given the better than expected labor market numbers, we expect the RBA to lower its unemployment rate forecast track. In principle, this should see them nudge the underlying inflation forecasts a little higher, with further support likely from a lower AUD assumption and higher oil price assumption.

The August numbers showed underlying inflation rising to 2.25% by mid-2020 - we expect they may pull this forward to Q4 2019. A key question will be whether the RBA is confident enough to lift its underlying inflation forecast to 2.5% (the mid-point of the target band) by the end of the forecast horizon (the August numbers were for 2.25%). 

We expect the RBA to once again state that they see the next move for the cash rate as up. We expect the global risks to once again be highlighted, with a likely sense that the global outlook has become increasingly uncertain.”