RBA's Lowe testifies: Central scenario is 3% GDP growth this year

The Reserve Bank of Australia (RBA) Governor Philip Lowe appeared for a testimony before the House of Representatives' Standing Committee on Economics, in Sydney, during initial Asian session on Friday.

The testimony is to range for three hours but initial reaction of the Australian Dollar (AUD) was soft as Lowe refrained from giving up on his earlier bias towards offering neutral policy signals.

Important points revealed during the initial statements: (Source: RBA)

• Central scenario 3 pct growth this year.
• Does not see a strong case for a near-term change in the cash rate.
• Monetary policy already providing considerable support to the Australian economy.
• Much will depend on what happens in our labour market.
• Shift in rate view largely reflects the change in the outlook for consumption.
• Important to point out that we are still expecting further progress towards our goals.
• If we do make this progress, it remains the case that higher interest rates will be appropriate at some point.
• Labour market outcomes have been better than we earlier expected.
• We continue to expect unemployment to move lower over the next couple of years to around 4.75 percent.
• In terms of inflation, the recent outcomes have been a bit lower than we had been expecting.
• By the end of 2020, inflation is forecast to reach 2¼ percent.
• The economy is benefiting from increased spending on infrastructure and a pick-up in private investment.
• The strong growth in jobs is also supporting spending, as is the sustained low level of interest rates.
• Globally, the central scenario also remains a reasonable one.
• Lists trade tensions, Brexit, rise of populism, strains in some western European economies as political risks.
• Monitoring Chinese economy closely.
• The board has recently been paying "particularly close attention" to the strength of household spending and to developments in the housing market.
• Determining the underlying strength of consumption has been complicated.
• Available data suggest that the underlying trend in consumption is softer than it earlier looked to be and this has affected the outlook for the economy.