As part of WPAC's note on their leading index data release earlier is a commentary on the Reserve Bank of Australia
Worth taking heed of as an update ICYMI:
- The minutes of the November meeting along with a recent speech from the Governor emphasise a significant pivot in the Board’s approach to monetary policy. The labour market now takes centre stage.
- Consistent above trend growth will be required to lower the unemployment rate and deliver a ‘tight labour market’. For the meetings over the course of the first half of 2021 the Board will be focussed on assessing the impact on the economy of their Quantitative Easing program.
- That is scheduled to be completed by June next year and with ample flexibility on its balance sheet it is not surprising that the minutes conclude that “the Board is prepared to do more if necessary.
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Incidentally, WPAC on the leading index data:
The six-month annualised growth rate in the Westpac-Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to trend three to nine months into the future ...
- the first positive, above trend, growth rate since November 2018.
- also the strongest seen since the early 1980s
- it mainly reflects the severity of the preceding contraction
- momentum will slow in 2021 as the sharp initial improvement in activity due to the easing of domestic restrictions ends.