RBA SoMP repeats the Bank does not expect to hit its inflation & jobs goals until 2024 at the earliest

Author: Eamonn Sheridan | Category: Central Banks

Reserve Bank of Australia Statement on Monetary Policy 

Headlines via Reuters:

  •  board committed to maintaining highly supportive monetary policy
  • do not expect to meet unemployment, inflation goals until 2024 at the earliest
  • raises GDP forecast for 2020, lowers unemployment forecasts out to 2022
  • even with upgraded forecasts, unemployment and inflation still seen too low by mid-2023
  • even in upside risk scenario underlying inflation still below 2% by mid-2023
  • forecast y/y GDP growth -2% dec 2020, 3.5% dec 2021, 3.5% dec 2022, 3% June 2023
  • forecast unemployment 6% dec 2021, 5.5% dec 2022, 5.25% June 2023
  • forecast wage price index 1.5% dec 2021, 1.75% dec 2022, 2% June 2023
  • forecast underlying inflation 1.25% dec 2021, 1.5% dec 2022, 1.75% June 2023
  • forecasts assume no change in cash rate, stimulus package in line with Feb statement
  • forecasts assume Australian international borders closed until at least end of 2021
  • likely unemployment has already peaked, end of jobkeeper support is one uncertainty
  • key uncertainty is how consumption responds to tapering of some government fiscal support
  • high commodity prices have put upward pressure on a$
  • trade surplus to be significantly higher than previously assumed due to rise in terms of trade
  • long-term Australian bond yields about 30 bps lower because of qe buying program

 Link to the full SoMP:

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  • 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.
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