Preview of the Reserve Bank of Australia Statement via HSBC
(Yes, that's right, not only are we getting the Australian Bureau of Statistics reweight of the CPI, the following day (Tuesday 7 November) is the RBA meeting and then Friday (10 November) is the quarterly Statement on Monetary Policy!)
HSBC (this is their summary, referring to Friday's Statement ... HSBC expect no change to rates on Tuesday):
- Underlying inflation remains below the RBA's 2-3% target band, but is clearly past its trough
- At the same time, the labour market is tightening up which is expected to lift wages growth and inflation in coming quarters
- Fixed income strategy: this meeting is unlikely to be the catalyst for RBA policy to be re-priced, favour the long-end
And, more:
RBA strategy and comments
- We expect the RBA to leave its forecasts for growth and inflation largely unchanged from those published in August. The RBA's last set of published forecasts, in the August official statement, showed GDP growth forecasts to be 2-3% over 2017 and 2.75-3.75% over 2018. The RBA's inflation forecasts showed underlying inflation forecast to run at 1.5-2.5% over both 2017 and2018. Since the last statement the AUD has fallen modestly (-4%) and oil prices have climbed(+15%), which may put some upwards pressure on the RBA's headline CPI forecasts.
- However, we doubt the central bank will feed this through to its underlying inflation forecasts. However, there are expected to be some technical changes. As announced by Deputy Governor, Guy Debelle, in a recent speech, the RBA is planning to publish forecasts that are more precisely articulated in its next official statement (to the nearest 1/4 percent, rather than the 1 percentage point).
