Reserve Bank of Australia publish its Statement on Monetary Policy (SoMP) four times a year.
- The SoMP sets out the Bank's assessment of current economic conditions, both domestic and international, along with the outlook for Australian inflation and output growth. There are also a number of separate articles in the SoMP of interest.
Summary Headlines via Reuters:
- forecasts GDP 3% end 2021, 5.5% end 2022, 2.5% end 2023
- forecasts trimmed mean inflation 2.25% end 2021, 2.25% end 2022, 2.5% end 2023
- forecasts wages growth 2.25% end 2021, 2.5% end 2022, 3.0% end 2023
- says forecasts are conditioned on a path for the cash rate broadly in line with recent market pricing
- statement on monetary policy says for inflation to be between 2 and 3 per cent on a sustainable basis, the labour market will need to be tighter and wages growth materially higher
- says board will not raise the cash rate until these criteria are met, and is prepared to be patient
- says very low interest rates have also supported asset prices, which has strengthened the balance sheets of firms and households
- says how much consumption responds to higher household wealth is a key uncertainty for the outlook
- says with the economy now opening up, the solid momentum evident before the delta outbreak is expected to resume
bolding mine.
This repeating the 2024 expectation:
- If the economy evolves in line with the central scenario, wages growth is expected to have edged up to around 3 per cent and underlying inflation would have only just reached the middle of the 2 to 3 per cent target band by the end of 2023, for the first time in seven years. Depending on the trajectory of the economy at that time, the Board judges that this outcome could be consistent with the first increase in the cash rate being in 2024. In some other plausible scenarios, wages growth and inflation could be higher than implied by the central scenario. If this were to eventuate, an increase in the cash rate in 2023 could be warranted. However, in the Board's view, the latest data and forecasts do not warrant an increase in the cash rate in 2022.
Not adding much to what Lowe said in his statement on Tuesday.
TL;DR is (me paraphrasing):
- rate hike will be in 2024 according to our forecasts, unless conditions to hike are met earlier than that.
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