RBC on what they expect from the RBA monetary policy meeting
We expect the RBA to leave the cash rate unchanged
- marking the 15th month of steady cash
- Domestic data have been mixed but, on balance, weaker, with core CPI remaining sub-target and retail sales continuing to contract.
- Labour market data remain the bright spot in the economy.
Also, due on Friday is the quarterly Statement on Monetary Policy (SoMP). RBC again:
- We expect little change to the RBA's generally upbeat tone although they may acknowledge the softer inflation pulse which may be captured by a small downward revision to near-term forecasts in the SoMP.
- Of note, forecasts will now be to a quarter point rather than a broad range, which will give us a better sense of the RBA's base case and risks.
- We expect this new approach to remain consistent with expectations for a return to above-trend growth and within-target inflation by late 2018 and in 2019.
