7 May 2015
Preview of RBA statement on monetary policy - ANZ
FXStreet (Bali) - The RBA Statement on Monetary Policy (SoMP) on Friday will be keenly anticipated to gauge the extent of the easing bias, notes the Economics Team at ANZ.
Key Quotes
"The RBA’s quarterly Statement on Monetary Policy (SoMP) is due for release on Friday. Following the rate cut earlier this week, and the mixed signals in the post-meeting statement, the SoMP will be keenly anticipated to gauge the extent of the easing bias, if any, the Bank still holds. And from that, the potential for further monetary policy stimulus."
"We expect the RBA to characterise the outlook as one of ongoing below trend growth. In terms of the global backdrop, the Bank’s outlook is likely to continue to be mixed, with a bounce expected in the US after the weather affected Q1, but ongoing softness in Europe and Japan. Concerns about the outlook for China are likely to persist."
"Once again, though, we expect that the Bank will be more downbeat on the domestic economy. While the Bank pointed to “recent encouraging trends in household demand” in the post-meeting statement, we expect that any emerging optimism on this front will be more than offset by concerns about the outlook for business investment, both mining and non-mining. Moreover, the AUD remains stubbornly high, amid ongoing easy monetary policy around the globe."
"As such, we expect some small downgrades to the RBA’s GDP forecasts. We expect that growth numbers from late-2015 through to mid-2017 will be notched down by around ¼ppt. For end-2015 we expect growth to be forecast at 2½%, while for end-2016 we expect the RBA to forecast growth of 2¾-3¾%. Given the expectation of ongoing below trend growth, we anticipate that the Bank will continue to forecast the unemployment rate to trend higher and peak at around 6½%, broadly similar to the February SoMP, although there is the possibility of a slightly higher and/or later peak."
"The RBA is unlikely to significantly alter its inflation trajectory, following fairly substantive revisions three months ago. In particular, assumptions around the currency are unlikely to change much from those foreshadowed in February, and while crude oil prices are slightly higher the impact is unlikely to be large enough to shift the (already wide) forecast band."
Key Quotes
"The RBA’s quarterly Statement on Monetary Policy (SoMP) is due for release on Friday. Following the rate cut earlier this week, and the mixed signals in the post-meeting statement, the SoMP will be keenly anticipated to gauge the extent of the easing bias, if any, the Bank still holds. And from that, the potential for further monetary policy stimulus."
"We expect the RBA to characterise the outlook as one of ongoing below trend growth. In terms of the global backdrop, the Bank’s outlook is likely to continue to be mixed, with a bounce expected in the US after the weather affected Q1, but ongoing softness in Europe and Japan. Concerns about the outlook for China are likely to persist."
"Once again, though, we expect that the Bank will be more downbeat on the domestic economy. While the Bank pointed to “recent encouraging trends in household demand” in the post-meeting statement, we expect that any emerging optimism on this front will be more than offset by concerns about the outlook for business investment, both mining and non-mining. Moreover, the AUD remains stubbornly high, amid ongoing easy monetary policy around the globe."
"As such, we expect some small downgrades to the RBA’s GDP forecasts. We expect that growth numbers from late-2015 through to mid-2017 will be notched down by around ¼ppt. For end-2015 we expect growth to be forecast at 2½%, while for end-2016 we expect the RBA to forecast growth of 2¾-3¾%. Given the expectation of ongoing below trend growth, we anticipate that the Bank will continue to forecast the unemployment rate to trend higher and peak at around 6½%, broadly similar to the February SoMP, although there is the possibility of a slightly higher and/or later peak."
"The RBA is unlikely to significantly alter its inflation trajectory, following fairly substantive revisions three months ago. In particular, assumptions around the currency are unlikely to change much from those foreshadowed in February, and while crude oil prices are slightly higher the impact is unlikely to be large enough to shift the (already wide) forecast band."