Scanning some of the responses to the Reserve Bank of Australia cash rate decision and statement yesterday.
(and ps. there is plenty more to come from the RBA later this week including Governor Lowe answering questions in parliament and the quarterly Statement on Monetary Policy - both due on Friday Oz time)
Back to responses … this via Capital Economics (in brief):
- statement noted two reasons to be more optimistic. One is the passage of the government's tax cuts, which we estimate will boost households' disposable income by around 1% in the third quarter. The second is "signs of a turnaround" in the housing market
- RBA downgraded its GDP forecast for 2019
- acknowledged that the uncertainty generated by the trade war had increased
- The Bank now expects the unemployment rate to fall to 5% … well above the Bank's new estimate of the natural rate of 4.5%
- the Bank no longer anticipates any acceleration in wage growth
- Board now expects inflation to remain a little below rather around 2% in 2020
- the Bank adopted an explicit easing bias
CE forecast:
- we've pencilled in another 25bp cut in November followed by a further 25bp cut in February
Bolding above is mine
