7 Aug 2015
RBA statement monetary policy preview - ANZ
FXStreet (Guatemala) - Felicity Emmett Co-Head of Australian Economics explained that the RBA’s quarterly Statement on Monetary Policy (SoMP) is due for release and, as is always the case, the SoMP will be keenly anticipated to gauge the extent, if any, of the Bank’s monetary policy bias.
Key Quotes:
"In particular this quarter, there will be focus on the growth forecasts, especially in light of Governor Stevens’ recent comments that potential growth could be lower than the 3- 31⁄4% previously thought."
"Overall, we expect the RBA will continue to characterise the outlook as one of ongoing below-trend growth with spare capacity likely to remain in the economy for some time."
"In terms of the globe, the Bank’s outlook is likely to continue to be one of cautious optimism, with ongoing concerns about the risks around the outlook for China, especially given the recent sharp weakness in the stock market."
"We think there is potential for the RBA to downgrade growth forecasts once again, although the implications for the near term path of monetary policy are likely to be limited."
"For end-2015, the RBA could downgrade forecast GDP growth from 21⁄2% to 21⁄4% given that Q2 growth is shaping up to be relatively soft, although this is a line- ball call."
"Of more interest is the possibility that the Bank slightly downgrades its forecasts for growth further out the forecast horizon on the back of changed assumptions about ‘potential growth’. It’s difficult to be too certain about this, but Stevens’ recent hints that the RBA may be internally revising down its estimate of ‘potential growth’ in the economy suggest there is a risk of a downgrade."
"Downward revisions to growth that reflect lower potential growth don’t suggest that the Bank is closer to another cut, but do suggest that the terminal or ‘neutral’ cash rate is lower than it has been in history."
"There is a significant likelihood that the Bank revises down its unemployment forecasts. Given the recent better-than-expected labour market data, the starting point for the unemployment rate is a bit lower than we (and the RBA) had previously expected. We expect that the RBA could pull down its forecast peak in the unemployment rate closer to 61⁄4%. Importantly though, it’s likely to continue to forecast an extended period of elevated unemployment."
"We think the RBA is unlikely to alter its inflation trajectory, following downward revisions three months ago."
"While the currency is lower, pass-through to higher consumer prices continues to look fairly muted and, importantly, wages growth continues to surprise on the downside."
Key Quotes:
"In particular this quarter, there will be focus on the growth forecasts, especially in light of Governor Stevens’ recent comments that potential growth could be lower than the 3- 31⁄4% previously thought."
"Overall, we expect the RBA will continue to characterise the outlook as one of ongoing below-trend growth with spare capacity likely to remain in the economy for some time."
"In terms of the globe, the Bank’s outlook is likely to continue to be one of cautious optimism, with ongoing concerns about the risks around the outlook for China, especially given the recent sharp weakness in the stock market."
"We think there is potential for the RBA to downgrade growth forecasts once again, although the implications for the near term path of monetary policy are likely to be limited."
"For end-2015, the RBA could downgrade forecast GDP growth from 21⁄2% to 21⁄4% given that Q2 growth is shaping up to be relatively soft, although this is a line- ball call."
"Of more interest is the possibility that the Bank slightly downgrades its forecasts for growth further out the forecast horizon on the back of changed assumptions about ‘potential growth’. It’s difficult to be too certain about this, but Stevens’ recent hints that the RBA may be internally revising down its estimate of ‘potential growth’ in the economy suggest there is a risk of a downgrade."
"Downward revisions to growth that reflect lower potential growth don’t suggest that the Bank is closer to another cut, but do suggest that the terminal or ‘neutral’ cash rate is lower than it has been in history."
"There is a significant likelihood that the Bank revises down its unemployment forecasts. Given the recent better-than-expected labour market data, the starting point for the unemployment rate is a bit lower than we (and the RBA) had previously expected. We expect that the RBA could pull down its forecast peak in the unemployment rate closer to 61⁄4%. Importantly though, it’s likely to continue to forecast an extended period of elevated unemployment."
"We think the RBA is unlikely to alter its inflation trajectory, following downward revisions three months ago."
"While the currency is lower, pass-through to higher consumer prices continues to look fairly muted and, importantly, wages growth continues to surprise on the downside."