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6 May 2016
RBA's SoMP: Inflation forecasts slashed, lowers wages outlook
The RBA’s quarterly Statement on Monetary Policy (SoMP), issued quarterly, has been published, with the Central Bank lowering its inflation forecasts and wages outlook.
Key headlines - via Reuters
Policy easing based on lower inflation outlook, cooling in housing
Cuts inflation forecasts, gdp forecasts mostly unchanged yr average for 2016 revised up 0.5 ppt
Underlying inflation seen at 1-2 pct end 2016 (pvs 2-3 pct), 1.5-2.5 pct out to mid-2018 (pvs 2-3 pct)
GDP seen at 2.5-3.5 pct end 2016 out to end 2017, 3-4 pct to mid-2018
CPI data showed broad-based weakness in domestic cost pressures, slow growth in labour costs
Outlook for wage growth revised lower, to stay low for longer and then rise very gradually
RBA also cites retail competition, softer inflation in rental & home building, falling fuel & utility costs
Inflation expectations in australia below average, but have not declined as much as elsewhere
Outlook for domestic cost pressures, impact of a$ on inflation are key uncertainties
Unemployment seen around current rate to mid-2017, before declining gradually
Q1 gdp growth seen around same moderate pace as previous quarter
Household consumption to be a bit above average, net exports will continue to add to gdp
Outlook assumes recent rises in bulk commodity prices are not sustained, lng prices seen higher
Most of decline in mining investment to be over by end 2016, non-mining still subdued
Outlook for growth in australia's major trading partners revised a little lower
Key headlines - via Reuters
Policy easing based on lower inflation outlook, cooling in housing
Cuts inflation forecasts, gdp forecasts mostly unchanged yr average for 2016 revised up 0.5 ppt
Underlying inflation seen at 1-2 pct end 2016 (pvs 2-3 pct), 1.5-2.5 pct out to mid-2018 (pvs 2-3 pct)
GDP seen at 2.5-3.5 pct end 2016 out to end 2017, 3-4 pct to mid-2018
CPI data showed broad-based weakness in domestic cost pressures, slow growth in labour costs
Outlook for wage growth revised lower, to stay low for longer and then rise very gradually
RBA also cites retail competition, softer inflation in rental & home building, falling fuel & utility costs
Inflation expectations in australia below average, but have not declined as much as elsewhere
Outlook for domestic cost pressures, impact of a$ on inflation are key uncertainties
Unemployment seen around current rate to mid-2017, before declining gradually
Q1 gdp growth seen around same moderate pace as previous quarter
Household consumption to be a bit above average, net exports will continue to add to gdp
Outlook assumes recent rises in bulk commodity prices are not sustained, lng prices seen higher
Most of decline in mining investment to be over by end 2016, non-mining still subdued
Outlook for growth in australia's major trading partners revised a little lower