A response to the Reserve Bank of Australia yesterday from RBC, in summary, bolding mine:
made some notable dovish tweaks to the accompanying statement
- the most important change is the removal of the sentence "This should see some reduction in spare capacity in the economy" when discussing the likelihood of 3% plus growth. … the removal of this sentence is consistent with greater slack than originally thought and lingering capacity even with stronger growth.
- Consistent with the recent upward revision in its unemployment rate forecasts, it could see wages and inflation remain low for longer or lift rates even more gradually.
RBA also removed reference to an "improving labour market"
(RBC says the current pace of employment generation is insufficient to place downward pressure on the unemployment rate)
More from RBC:
RBA is broadly unconcerned with the recent dip seen in some parts of the housing market (in price terms), focusing instead on the lack of cash-flow pressure on households.
the statement errs on the dovish side, consistent with our view that the RBA is set to remain on hold for the duration of 2018, but with risks building that hikes begin only later than our long-held Q1 2019 base case.
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Stay tuned for the AUD GDP data at 0130GMT:
