ING with their thoughts on the implications of the GDP data released today from Australia for the Reserve Bank of Australia policy decision due Tuesday, June 7:
- GDP has not been flagged much by the Reserve Bank of Australia (RBA) in its recent deliberations on monetary policy. And whip-saw GDP data like this will not tell them much about the underlying strength of the economy.
- But for what it is worth, today's GDP data don't sound any undue alarm bells on economic activity and leave the RBA free to concentrate their attention on the tightness of the labour market, wages growth and inflation .
- As such, these figures leave the RBA free to hike rates again this month by 25bp, which would take the cash rate target to 0.6%. More will follow in due course and we look for the cash rate target to end the year at 1.6%.
There will be plenty of debate in the week between now and Tuesday about a hike greater than 25bps. ANZ and AMP are at 40bps.
Stay tuned.
AUD /USD update, a wobble or two but net its gone nowhere today:
