The Reserve Bank of Australia announces its monetary policy decision - 7 August 2018
- Prior decision 1.50%
- Low rates are supporting the economy
- GDP growth to average a bit above 3% in 2018, 2019
- Unchanged policy consistent with sustainable economic growth
- Policy consistent with meeting CPI target over time
- Inflation seen higher in 2019/20 than currently
- Wage growth remains low, likely to continue for a while
- Inflation data in line with expectations
- Headline CPI to be lower than earlier expected in 2018
- Housing markets have slowed in Sydney, Melbourne
- Tighter bank regulations have helped contain housing risks
- Household consumption remains a source of uncertainty
- AUD remains in range of past couple of years
Nothing that I can see that has a material impact on prices from first glance. The two key things are wages and inflation. The language for the former remains unchanged while the latter sees a negative tweak for 2018 but a more positive expectation next year and in 2020 - so very much a balanced change there.
The RBA mentions that they see the 2018 headline CPI a little lower at 1.75% - that's below the 2% to 3% band that they are comfortable with. In other words, no rate hikes are coming in 2018 as what you'd expect.
The full statement can be found here.
Other than that, the RBA appears to be more buoyant on the labour market outlook and highlights that the improvement there should lead to higher wages in due time and they're also rather comfortable with the recent easing in the housing market.
