Reserve Bank of Australia (RBA) quarterly Statement on Monetary Policy: Statement on Monetary Policy

  • Says current rates likely to be appropriate “for some time yet”
  • Spare capacity likely to be present in economy for much of the forecast period (to mid-2016) (this should help control inflation)
  • Labour market improving but unemployment not expected to drop consistently until after mid-2015
  • Lowers forecasts for underlying inflation over 2014, GDP seen slightly stronger
  • Underlying inflation seen at 2.75 pct mid-2014, 2.5 pct end of year, 2-3 pct thereafter
  • GDP seen at 3 pct by mid-2014, 2.75 pct year-end, picking up to above trend over 2015 (upgrades growth expectations)
  • AUD remains high, could fall over time given terms of trade are expected to decline
  • Substantial policy stimulus having desired effect, but significant headwinds remain
  • Fiscal consolidation points to very weak government demand over forecast period
  • Mining investment to fall sharply, subtract significantly from economic growth
  • Export volumes likely grew very strongly in Q1, growth to slow a little further out
  • Revised up forecasts for household consumption due to rising wealth, employment
  • Revised up forecasts for home building, very pronounced increase underway
  • Signs recent slowdown in China will prove temporary, authorities ready to support investment

Quick headlines via Reuters (bolding and comments in bold are mine), the link to the full statement is above

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The RBA have a series of regularly published reports, and they differ. Today’s is an example of number 3 on this list:

  1. The Reserve Bank Board normally meets eleven times each year, on the first Tuesday of each month, except January. Decisions regarding the cash rate target are made by the Reserve Bank Board and explained in a media release announcing the decision at 2.30 pm after each Board meeting.
  2. Minutes of the monetary policy meetings of the Reserve Bank Board are published two weeks after each meeting.
  3. The Statement on Monetary Policy sets out the Bank’s assessment of current economic conditions, both domestic and international, along with the outlook for Australian inflation and output growth. A number of boxes on topics of special interest are also published. The Statement is issued four times a year.

Earlier this week we had an example of number 1 on this list, the RBA May meeting, decision and accompanying statement

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AUD dipped 10-odd points and has come back. Not much to see here folks …