Kent spoke at the Australian Business Economists Conference Dinner
Mike and Ryan had headlines reported:
- RBA's Kent wouldn't like to see wage growth slow further
- Kent sees reasonable prospects for overall strong economic growth
The topic of the speech was "Australia's Economic Transition - State By State"
I'll focus here on Kent's comments on the national economy (the overall view, which is what will have most bearing on monetary policy), this via CBA this morning, in brief:
- Australia's GDP growth will be close to its potential rate over the next few years
- This is expected to see the unemployment rate likely to edge slightly lower
- Spare capacity in the labour market could remain an issue for some time yet
- RBA expects the inflation rate to stay low in the short term and then move back to more normal levels based on a gradual rise in wages growth
- 2017 growth outlook ... RBA believes that 80% of the headwind from the mining investment "cliff" are behind us
- (CBA add that mining activity, including exports, is now positive for growth already)
- The recent lift in commodity prices has caused the RBA to revise upwards its terms of trade forecasts (RBA expects the terms of trade to stay above the early 2016 low, or about 25% above the levels of the early 2000s) (CBA add their own research on the ToT ... "we expect to rise by 5% in the September quarter and around 16% in the December quarter")
- Comments on the housing markets detailed the varying population growth outcomes. Dwelling construction has continued in some States even though there were clear signs of weaker population growth underway
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Kent's speech was upbeat. There are headwinds, and risks, though.
