From TD on the Reserve Bank of Australia today, this in brief from a longer report:
RBA still sees policy targets being 'gradually' achieved despite a recent string of weak data
For Friday's Statement on Monetary Policy (SoMP)
- we see the RBA delaying achieving 2+%/y underlying inflation into 2020, rather than later this year.
The RBA upgraded its view on the "strong" labour market, still expecting the unemployment rate to ease to 4¾% over the projection period
- An upbeat twist included the forward-looking "household income has been low ... but is expected to pick up and support household spending" (i.e. offsetting falling house prices)
AUD … bounced … on the not-dovish RBA tone
- Consensus expects the 1.5% cash rate to prevail through to mid-2020, and that may well be the case. However, after the CPI hurdle last week (core at 1¾%/y as widely expected) and a 'gradual but on target' RBA today, we look to Q4 wages on February 20 to assess the timing of the first hike (November to 1.75% is our base case).
