RBA Gov Lowe speaking now - central scenario is 3% GDP growth this year

There will be three hours or so of testimony from Reserve Bank of Australia Governor Lowe ….

TGIF …

OK, here goes … Headlines via Reuters

• central scenario 3 pct growth this year
• does not see a strong case for a near-term change in the cash rate
• monetary policy already providing considerable support to the Australian economy
• much will depend on what happens in our labour market
• shift in rate view largely reflects the change in the outlook for consumption
• important to point out that we are still expecting further progress towards our goals
• if we do make this progress, it remains the case that higher interest rates will be appropriate at some point

• if sustained rise in unemployment, lack of further progress on inflation lower rates might be appropriate
• adjustment in the housing market is not expected to derail the economy
• will put housing markets on more sustainable footing, allow more people to buy own home

• labour market outcomes have been better than we earlier expected
• we continue to expect unemployment to move lower over the next couple of years to around 4.75 percent
• in terms of inflation, the recent outcomes have been a bit lower than we had been expecting

• by the end of 2020, inflation is forecast to reach 2¼ percent
• the economy is benefiting from increased spending on infrastructure and a pick-up in private investment
• the strong growth in jobs is also supporting spending, as is the sustained low level of interest rates
• globally, the central scenario also remains a reasonable one
• lists trade tensions, Brexit, rise of populism, strains in some western European economies as political risks
• monitoring Chinese economy closely
• the board has recently been paying "particularly close attention" to the strength of household spending and to developments in the housing market
• determining the underlying strength of consumption has been complicated
• available data suggest that the underlying trend in consumption is softer than it earlier looked to be and this has affected the outlook for the economy

I bolded some of the above, what seems to be the developments to watch given the RBA is most closely watching these.

The full text is here, this is his opening statement. there will plenty more to come, Q&A

• Opening Statement by Philip Lowe, Governor, to the House of Representatives Standing Committee on Economics, Sydney

Take note:

• Today, the probability that the next move is up and the probability that it is down are more evenly balanced than they were six months ago. This shift largely reflects the change in the outlook for consumption that I have spoken about.