Preview of the Reserve Bank of Australia Statement on Monetary Policy, due out today, 6 February 2015, at 0030GMT.
The Statement on Monetary Policy is issued four times a year.
It’s a more in depth publication than the monthly (except January) statement issued by RBA governor Stevens to coincide with the announcement of the decision of the monetary policy board.
It 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
Back on Tuesday of this week we had the latest rate cut decision from the bank, the full text of the accompanying statement is here, the summary headlines are here.
Today’s fuller statement will expand on the reasons for the cut and more importantly, give us a better idea of how the RBA sees the outlook for the economy and monetary policy.
We may also hear about its ‘business liaison programme’ and if the RBA was getting feedback from the business sector that tipped it over to cut rates further. Specifically, what has changed in the prior two months that caused such a big shift from the December outlook when a further period of stability was judged the best course?
We can expect to see more on:
- Growth continuing at a sluggish, below trend pace
- And growth in output will reflect this, also remaining below trend for longer
- That domestic demand growth remains quite weak
- The persistent fall in the terms of trade reducing income growth
- Comments on inflation, the RBA said on Tuesday that it sees inflation consistent with target over next 1-2 years, I expect we’ll get more detail on this … given the tick up in the core inflation rate recently it was an eyebrow-raiser for me
- On unemployment, we should get more on what the RBA sees, most recently they’ve been raising their expected peak rate
- On the housing market (and the heightened risk the further cut in rates this week will entail) we might get some more detail on the steps they are working on with other regulators
On the currency comments along the lines we got on Tuesday, we can expect:
- That the AUD is still above most estimates of fundamental value
- The RBA wants to see falls in the currency to help balance economy
RBA Governor Stevens
