Australia's GDP data yesterday was a huge beat, showing surging growth
The report wasn't perfect, of course, with one of the concerns being that with growth getting a big boost from exports there is little in the numbers to comfort the Reserve Bank of Australia that inflation will not continue to fall.
Inflation is currently running below the RBA's target band of 2 to 3% and the latest rate cut we got from the central bankw as couched in language saying the cut was to try to boost inflation (an over simplification, but that's it in a nutshell).
Bloomberg have picked up on this, and draw a comparison with Sweden, where the central bank (the Sveriges Riksbank) is running a very loose monetary policy (negative rates and bond-buying) despite strong economic growth.
Bloomberg quote JP Morgan head of fixed-income and currency strategy Sally Auld:
- "Exports look good on paper, but they're not going to help them overcome the structurally lower inflation story in Australia."
- Expects a rate cut from the RBA in August
More at Bloomberg, here
And, now for some ABBA (you knew this was coming, right?) ... from Aussie movie Muriel's Wedding
