RBA: Upbeat statement on Monetary Policy - Rabobank

The RBA’s latest Statement on Monetary Policy appears upbeat despite lowering its GDP forecasts by ½% this year to 2-3% y-o-y and ¼% in H1 2018 to 2.5 - 3.5%, still above potential growth, according to Michael Every, Senior Asia-Pacific Strategist at Rabobank.

Key Quotes

“The SoMP stressed a stronger AUD has “had a dampening effect” on growth, and China is a potential concern. Furthermore “wage growth is expected to remain subdued, but to increase gradually over the forecast period as labour market conditions continue to improve,” yet “slow real wage growth is likely to weigh on consumption, especially if households expect the slow growth to continue for some time. Some households may also feel constrained from spending more out of their current incomes because of elevated levels of household debt.”