RBA’s SoMP: Further rise in AUD would lower economic growth, inflation

The Reserve Bank of Australia (RBA) released its quarterly Statement of Monetary Policy (SoMP) on Friday,

Main Headlines:

Further rise in AUD would lower economic growth, inflation

Global economic conditions have improved over the past year

Balanced low inflation against risks of rising household debt

Recent rise in AUD has had modest dampening effect on economic forecasts

Expects underlying inflation to reach around 2% in H2 2017, rise a little thereafter

Utility prices to rise more than first thought over next few years, make large addition to CPI

Economy growing around 3 percent for next two years

Sees unemployment little under 5.5% by end 2019, recent jobs data provides more confidence

Trims GDP forecast for Dec 2017 to 2-3%, Dec 2018 unchanged at 2.75-3.75%, 2019 raised to 3-4%

Underlying inflation forecasts unchanged at 1.5-2.5% end 2017 and 2018, 2-3% by end 2019