A couple of previews of the RBA's SoMP release
The statement will be released at 0130 GMT. In the statement, they'll be releasing their updated forecasts on the economy (inflation, unemployment rate, growth) along with a couple of comments.
The last release was in February here. And below are some previews from local banks for today's release:
CBA
- Neutral bias expected
- Upbeat on world and local growth outlook
- We don't expect any major changes to the RBA's key forecasts
- However there may be some tweaks to the near term forecasts
- Inflation may be revised up in the near term with the Q1 CPI result coming in a little stronger than the RBA had expected
- The unemployment rate forecasts may also be revised a little higher in the near term with the unemployment rate stuck around the 5½% mark because of strong labour market participation
- RBA Governor Lowe delivered an upbeat speech on economic prospects earlier in the week and indicated that the RBA expected above-trend growth in the year ahead
- Inflation is expected to run at the lower end of the 2-3% target band
NAB
- There's already been the post-Board statement and the relaxed Lowe speech so the initial focus might well centre on the inflation forecasts and any tweaking thereof
- Underlying inflation for June and Dec 18 might be lifted ¼% to 2%
- Question will be of any change to 2019 (and 2020)
- Unlikely, given Lowe's comments of Q1 CPI being in line with their forecasts
Westpac
- Expectation is that the Bank will back off a little with its 2018 growth forecast from 3.25% to 3.0%
- The 2019 forecast will remain the same at 3.25%
- If the Bank were to raise the 1.75% trimmed mean inflation forecast for December 2018 to 2.0% there would be no real raised eye brows
- Although it would be based on the trimmed mean stringing together a series of 0.5's - not supported by the track record
- Such an adjustment would signal a more confident assessment of the inflation outlook as a result of the March quarter Inflation Report
- But we do not think that conclusion is justified
- Overall the Statement and the SOMP are unlikely to see any significant changes in market sentiment
It is expected that the RBA will be more positive on international and domestic developments, after mentioning in the statement earlier in the week that "growth will average above 3% in 2018, 2019". But the market could still jump a couple of pips on that I reckon.
The key would be to watch out for their inflation forecast. In February's release, they had a forecast of 1.75% in 2018. A more upbeat projection could help to support the aussie in the near-term - considering the trimmed mean reading did tick higher in Q1's report here.
