A take on the Reserve Bank of Australia statement yesterday, this via TD:
policy statement dropped some redundant phrases
- aside from real- time observations about European political wobbles and concerns about trade/ protectionism from US President Trump, it was a near-repeat of the May message:
- GDP growth to be a bit above 3% this year and next;
- wages and inflation low (but off the lows) and expected to rise gradually over time;
- AUD within the range of the last two years.
More from TD, on GDP coming up soon:
We look for +0.8%/q, with upside risk. … Q1 GDP partials
- trade adds +0.3%pts
- government consumption at +1.6%/q
- and investment at -2%/q
- equates to public spend of +0.8%/q and adds +0.2%pt to GDP
- As we expected +0.4%pts for government spending, this offsets yesterday's inventory upside.
On the Australian dollar:
- What if Q1 GDP is super strong at >1%/q? We recommend fading any pop higher in AUD or short bond yields in reaction to the headlines.
- The RBA already expects GDP growth to print above 3%/y, so will not necessarily be a surprise to the Bank. We also know that RBA Governor Lowe is looking for wages growth closer to 3%/y, hence the endless patience in the meantime.
