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Weekly Economic Commentary

Weekly Economic Commentary

Categories: General, Commodities

The Minutes of the February Reserve Bank of Australia Board Meeting last week provided no new information to supplement recent statements made by the central bank. Key messages were that the Board is more confident about the prospects for a gradual return to trend growth, which it has been forecasting for some time, and that the Board was reviewing the surprisingly high December quarter CPI data, which they describe as “a puzzle”.

For me, the RBA is likely to keep the official cash rate on hold at 2.50% unless either: (a) the unemployment rate rises more sharply than the current RBA forecast; (b) the RBA’s forecast for GDP growth is revised down to below trend; or (c) the Australian dollar strengthens. While the timing of the first official cash rate rise by the RBA is still uncertain, there is a 20% chance of one rate hike before Christmas and a higher level of conviction that the tightening cycle will be gradual.

Source: www.ruralbank.com.au

 

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