RBA SoMP: Expect no revisions to growth forecasts - HSBC

Dhwani Mehta FXStreet

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.”

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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