|

RBA's (SOMP): trims inflation forecasts, underlying inflation not expected to reach 2 pct until early 2019

In today's Reserve Bank of Australia's quarterly Statement on Monetary Policy (SOMP), where the Bank changed its policy of using forecasting 'ranges' and instead use central forecasts, AUD/USD has dropped a hadfull of pips into the 0.70's from a starting point of 0.7683 in a relatively balanaced set of headlines that have not vered far from expectations, although the bank has losened its inflation forcasts, "underlying inflation not expected to reach 2 pct until early 2019".

Headlines from the SOMP as follows:

Has held rates steady to provide "Appropriate support" to the economy.

RBA lowers inflation forecasts, underlying inflation not expected to reach 2 pct until early 2019.

RBA forecasts underlying inflation at 1.75 pct to dec 2018, then 2 pct to dec 2019.

RBA forecasts cpi inflation at 2 pct to june2018, then 2.25 pct to dec 2019.

RBA estimates cpi reweighting means underlying inflation overstated by 0.3 ppt.

RBA: entry of foreign retailers to constrain retail inflation.

RBA forecasts gdp growth 2.5 pct dec 2017, 3.25 pct dec 2018, 3.25 pct dec 2019.

Key notes:

RBA policy statement:

The RBA Monetary Policy Statement released by the Reserve bank of Australia reviews economic and financial conditions determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. It is considered as a clear guide to the future RBA interest rate policy. Any changes in this report affect the AUD volatility. If the RBA statement shows a hawkish outlook, that is seen as positive (or bullish) for the AUD, while a dovish outlook is seen as negative (or bearish).

Author

Ross J Burland

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

More from Ross J Burland
Share:

Editor's Picks

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold treads water around $4,000

Gold prices maintain its offered stance in place at the end of the week, hovering around the key $4,000 threshold per troy ounce. The persistent selling bias in the precious metal comes amid decent gains in the US Dollar and an acceptable rebound in US Treasury yields across the curve, all alongside further upside traction in crude oil prices.

Crypto Today: Bitcoin holds the 50-day EMA as Ethereum and XRP face structural resistance

Bitcoin gradually ticks up on Friday, trading above $81,000. The Crypto King has recently defended structural support near $80,000, reinforcing the prevailing bullish outlook. Ethereum similarly edges higher above $2,400, while Ripple trades above $1.32 after testing support around $1.30.

The French bond panic is overdone. Here's what the market is misreading 

France's 10-year government bond yield has climbed above 5%, reigniting fears of a sovereign debt crisis in the Eurozone. With public debt exceeding €3.5 trillion, persistent budget deficits and a fragmented political landscape, investors are increasingly questioning the French government's ability to stabilize its finances.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.