Commonwealth Bank on today's GDP data, this their comments on what it means for the Reserve Bank of Australia:
(bolding mine)
- On the monetary policy front, the market is correctly pricing in the chance of further policy easing. Today's growth outcomes have significantly undershot the RBA's expectations and it will take a heroic effort from here for GDP growth to meet their year-end forecast.
- However, we think that Governor Philip Lowe is desperate not to cut rates given it risks stimulating the housing market again. As such, we think that policy easing is off the table unless the housing market falters or the unemployment rate materially rises
- The most recent employment reports suggest that things have improved a little more recently
- But the dynamics at work in the economy suggest that any move in rates over the next year will be down and not up.
