RBA SoMP: Ups GDP forecast from mid-2018, inflation unchanged

The RBA’s quarterly Statement on Monetary Policy (SoMP) has been published, with the Central Bank keeping its GDP outlook unchanged in near term, while showing more optimism further out. 

Key Headlines - via Reuters

GDP forecast unchanged for June at 1.5-2.5% and December at 2.5-3.5%; upgrades outlook for June 2018 by 25 bps to 2.75-3.75

Underlying inflation forecasts unchanged at 1.75% June 2017, 1.5-2.5% out to December 2018, 2-3 pct by June 2019

Ups GDP forecast from mid-2018, inflation unchanged 

Policy: underlying inflation to be around 2% early 2018 

Underlying inflation rise is still quite gradual 

Wage pressures expected to pick up only gradually 

Underemployment might be exerting downward pressure on wages 

Expect consumption growth to broadly track income growth 

Household income likely to remain quite weak 

Uncertain when stronger non-mining recovery to take hold 

Warns sentiment in housing market could turn quickly if prices fall 

Substantially weaker housing market could slow consumption, inflation 

Wage growth outlook particularly imp for inflation outlook 

Ups near-term terms of trade outlook on coal prices 

Terms of trade forecast further out is little-changed