Central Banks

Reserve Bank of Australia Statement on Monetary Policy 

  •  board prepared to expand bond buying program if needed
  • board will closely
    monitor impact of bond purchases on economy, jobs
  • board is not
    contemplating a further reduction in interest rates
  • little to be gained
    from moving to negative interest rates
  • committed to not
    raise rates until inflation sustainably in 2-3% target band
  • forecasts y/y GDP
    growth at -4% q4 2020, +5% q4 2021 and +4% q4 2022
  • forecasts y/y
    trimmed mean inflation at 1% q4 2020, 1% q4 2021 and 1.5% q4 2022
  • sees unemployment at
    8% q4 2020, 6.5% q4 2021, 6% q4 2022
  • sees wage growth at
    1.25% q4 2020, 1.25% q4 2021, 1.75% q4 2022
  • GDP not expected to
    return to pre-pandemic level until end of 2021
  • forecasts assume no
    new major covid outbreak in Australia, international borders shut
    until end 2021
  • victoria lockdown
    likely took around 2 ppt from q3 gdp, expected to recover in q4
  • slower population
    growth means economy to be noticeably smaller than previously assumed
  • forecasts assume
    population growth of just 0.2% in 2020/21, 0.4% in 2021/22
  • business investment
    expected to decline further, unlikely to recover much
  • resurgence of
    covid-19 in some major economies increases risks to global outlook

Text here

Anyone see any bombshells in those highlights (via Reuters) ?

AUD is little changed after the release and for the session so far as a whole. It had a strong rally overnight alongside other ‘risk’ trades. 

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