RBA leaves cash rate unchanged at 1.5%

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    The Reserve Bank of Australia left the cash rate…



    Prior decision 1.50%
    Inflation likely to remain low for some time
    Sees inflation picking up gradually as economy strengthens
    Unchanged policy consistent with sustainable economic growth
    Sees GDP growth average above 3% in 2018, 2019
    Progress on unemployment and inflation expected to be gradual
    Rising AUD would lead to slower economic pickup
    AUD remains in range of past couple of years
    One continuing source of uncertainty is outlook for household consumption
    Housing markets have slowed in Sydney, Melbourne
    Wage growth remains low, likely to continue for a while yet
    Rate of wages growth appears troughed
    Inflation figures were in line with expectations, expected to be a bit above 2% this year
    Global economy has strengthened over the past year
    Australia’s terms of trade expected to decline, but remain at high level


    [b]RBA statement on monetary policy – 4 May 2018
    Lifts 2018 core inflation forecast to 2% from 1.75%
    GDP growth forecast of 3.25% by December 2018, 2019
    GDP growth forecast of 3% by mid-2020
    If economy improves as expected, higher rates are appropriate
    A significant appreciation in AUD would dampen growth and inflation
    2018 unemployment rate forecast now at 5.5%, previously 5.25%
    Labour market will still have spare capacity by mid-2020
    Data implies economy currently growing around 2.75%
    Data revisions show more resilient household consumption, sees solid growth for Q1
    Economic growth for Q1 looks to have picked up, partly thanks to exports
    Significant escalation of trade protectionism could derail global growth

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