More from MNI (earlier from them here) (Bolding is mine):
- There’s a small possibility of a mild shift in tone to account for the risk from tighter fiscal policy and as inflation forecasts are expected to be trimmed
- All 20 economists in an MNI poll expect the RBA to leave the rate steady
- At the meeting, the RBA board will have fresh forecasts on growth and inflation, which are prepared for the quarterly Statement of Monetary Policy to be published on May 9.
- Given the rise in the exchange rate since February – the trade-weighted index is around 71.2 now versus 69.0 in February – and lower-than-expected first quarter inflation, it’s likely that inflation forecasts will be lowered.
- There’s also the likelihood of growth being downgraded but this may be small based on the exchange rate change as the RBA’s overall view on the economy has improved since February.
- In particular, the RBA has recently upgraded its view on the labor market, so it may have a more positive view on household spending.
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I am wary of the “it’s likely that inflation forecasts will be lowered” given what we saw from the TD Securities inflation gauge yesterday (here and here).
