RBA: Inflation forecasts lowered, GDP trimmed – TDS

By FXStreet FXStreet (Delhi) – Prashant Newnaha, Rates Strategist at TD Securities, notes that the Australian markets were looking for the Statement on Monetary Policy to downgrade the RBA’s inflation forecasts, with little need to alter the GDP outlook.

Key Quotes

“In the end, underlying inflation was lowered by a bigger -½%pt to 2%/yr for year end and early 2016, while the GDP projections were trimmed a quarter-point here and there, the latter adjustments due to LNG exports taking longer to materialize.”

“So with growth and inflation a little lower than that expected in August, this justifies this week’s inclusion of an explicit easing bias into the RBA’s toolbox. Clearly the downgrades were not sufficient to trigger a rate cut on the day, as was in the case in February.”

“Worth noting the softer outlook for the Asian region is key for the RBA, with a slower China key for trade and commodity prices. This was up the front in the Overview, and up the back as a key downside risk. The reason this is worth noting is that China was dropped from Tuesday’s RBA Board Statement.”
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Source:: FX Street