Preview of the Reserve Bank of Australia (RBA)’s Statement on Monetary Policy, which is due for release by the bank at 0030GMT on 07 November 2014.
That’s Friday at 11.30am Sydney time.
Ohhhh, all right then … 7.30pm Eastern US time, Thursday evening.
The Statement on Monetary Policy sets out the Bank’s assessment of current economic conditions, both domestic and international, along with the outlook for Australian inflation and output growth. A number of boxes on topics of special interest are also published. The Statement is issued four times a year.
So, what that means is that most interest is going to centre on any changes to the bank’s outlook (for GDP and inflation specifically).
- On Thursday in Australia we got employment data (Australia – October Employment Change: +24.1K and Australia employment data – Analysts reactions). It wasn’t a great result and the doubts over the veracity of the data are still foremost in the market’s mind …. but while not great, the result wasn’t terrible.
- The CPI for Q3 was a big data point (Australia Q3 CPI and Australia – Analysts start to revise their RBA rate hike forecasts in the wake of benign CPI) … headline inflation fell from the top of the target band down to 2.3% y/y – confirming inflation is not an issue in Australia (is it anywhere?). In addition, underlying inflation moderated, down to 2.5% y/y for the ‘trimmed mean’ – below the RBA’s forecast issued in August.
It seems likely that there is room for the RBA to issue a downgrade to its inflation forecasts … but whether this translates to a more dovish tone in the statement remains to be seen. There wasn’t much sign of one in the statement accompanying the decision (no change) after Tuesday’s meeting (not hawkish, neither … resolutely neutral it was).
Possibly complicating a move toward any dovish leaning is the falling AUD – this will naturally push up the price of imported goods and feed through to future inflation readings via the tradables component of the inflation basket. With concerns about weak global growth and disinflationary trends, it seems unlikely the RBA will be too moved by this.
“I’m tellin ya – the interest rate, it was THIS big!”
