HSBC’s head economist for Australia/NZ Paul Bloxham on the outlook for Australia:
- Was expecting an RBA hike in Q4 of 2015
- Is now forecasting a hike in Q1 of 2016
Cites a lowering of his inflation forecasts
- Expects headline inflation to at 1.7% (prrior forecast 1.9%) and underlying inflation at 2.3%
- “We are revising down our full-year view on inflation, given a lower working assumption for the oil price.
- Our working assumption is now for oil prices at $55/barrel this year (previously $79/barrel).
- A 30% lower oil price is expected to push petrol prices down by 10% to 15%. Given that petrol accounts for 3.5% of the consumer basket, this should knock 0.5ppts off headline CPI inflation.
- With this in mind, we are revising down our headline CPI forecast to 1.9% for 2015 (previously 2.4%)..
- We see the lower oil price as a net upside risk for growth, but we are maintaining our central case for GDP growth of 2.8% in 2015″