RBA Leaves Rate Unchanged With Further Spare Capacity in Australian Economy

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  • #20618
    Corporal
    Participant

    The Reserve Bank of Australia (RBA) as expected…

    [article]1496[/article]

    #20643
    TradersCom
    Keymaster

    [size=5][b]Reserve Bank of Australia Statement on Monetary Policy
    [/b][/size]

    Highlights

    Downgrades economic growth and inflation outlook for Australia

    Cuts GDP forecast for June 2019 by 0.75 ppt to 1.75 pct, Dec 2019 seen at 2.75 pct, Dec 2020 at 2.75 pct

    Sees trimmed mean inflation 1.5 pct June 2019, 1.75 pct Dec 2019, 2 pct for Dec 2020 and June 2021

    Forecasts unemployment at 5 pct out to Dec 2020, 4.75 pct by June 2021

    Board judged lower jobless rate “achievable” given subdued inflation
    Board will be “paying close attention” to labor market at upcoming meetings

    Forecasts made on “technical assumption” rates follow market pricing of two cuts to 1 pct
    Near-term indicators of labor demand have softened since the Feb. statement
    Partial indicators point to moderate GDP growth for the March quarter

    RBA says domestic price pressures more subdued than previously thought
    weakness in housing market dragging on inflation, rent inflation lowest since 1993
    inflation constrained by government efforts on cost of living, a key uncertainty to outlook

    RBA says near term outlook for consumption growth has been revised lower
    Strong growth in tax payments has dragged on household incomes

    A$ at low end of range, low bond yields offsetting upward pressure from higher commodity prices
    RBA says outlook for export growth and terms of trade revised upward

    Bank funding costs have eased, but not flowed through to variable mortgage rates
    RBA says some signs growth has picked up in China
    RBA says trade tensions remain downside risk to global outlook

    Full Statement Here RBA May Monetary Policy

    #20816
    Helmholtz Watson
    Participant

    [size=5][b]Australia Expected to cut interest rates this week
    [/b][/size]

    The Reserve Bank of Australia is widely expected to deliver a rate cut in the forthcoming policy meeting amid falling home prices, weak inflation and tepid wage growth, although IHS Markit considers a delay until August more likely, after the release of the June
    quarter inflation figures.

    Governor Philip Lowe argued recently that a lower cash rate will support jobs growth and boost inflation. While the flash CBA Australia PMI pointed to a tentative revival in economic activity, it is not at all guaranteed that growth could pick up in coming months. Meanwhile, IHS Markit expects updated GDP data to show the Australian economy to have expanded at a slower annual rate of 2.1

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