9 Aug 2013
RBA Quarterly MP Statement: Inflation, demand provides room to cut further
FXstreet.com (Barcelona) - The Statement on Monetary Policy from the Reserve Bank of Australia, published quarterly, updated the market on the assessment of the central bank in current economic conditions along with the outlook for inflation and growth.
The main take-away points were that recent inflation and wage data had not lessened scope to cut at the August meeting. The RBA cut the December 2013 GDP forecast to 2.25% vs. 2.5% prior, adding that growth is expected to remain below trend to mid 2014 only recovering above trend starting in 2015. On the unemployment rate, the RBA expects to head gradually higher for the next year or so.
Looking at the Australian Dollar and its fair value, the RBA said it is still high, and at lower levels would contribute to raise profile for economic growth and inflation. The lower growth and labour costs are expected to offset the inflationary effect of a lower AUD. Inflation is seen at 2.25% by end of the year and H1 2014.
On the outlook for global growth, the RBA downgraded it from May, saying it was "a little weaker." On China, the RBA is skeptical China will pick up on growth pace in coming quarters. Talking about the housing market, the RBA said it has improved with higher prices and rising home building, a trend likely to continue. However, on household consumption, the RBA noted it was weaker.
The main take-away points were that recent inflation and wage data had not lessened scope to cut at the August meeting. The RBA cut the December 2013 GDP forecast to 2.25% vs. 2.5% prior, adding that growth is expected to remain below trend to mid 2014 only recovering above trend starting in 2015. On the unemployment rate, the RBA expects to head gradually higher for the next year or so.
Looking at the Australian Dollar and its fair value, the RBA said it is still high, and at lower levels would contribute to raise profile for economic growth and inflation. The lower growth and labour costs are expected to offset the inflationary effect of a lower AUD. Inflation is seen at 2.25% by end of the year and H1 2014.
On the outlook for global growth, the RBA downgraded it from May, saying it was "a little weaker." On China, the RBA is skeptical China will pick up on growth pace in coming quarters. Talking about the housing market, the RBA said it has improved with higher prices and rising home building, a trend likely to continue. However, on household consumption, the RBA noted it was weaker.