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8 Feb 2013
Forex Flash: RBA leaves door open for future rate cuts – NAB
The RBA’s quarterly statement on Monetary Policy (SMP) cut its near term inflation and growth forecasts leaving the door open for rate cuts ahead. Our read of the Statement is that it was on the dovish side.
On the outlook for the economy, the RBA’s assessment is that growth will be a little below trend in the near term (2.5% over the year to June 2013) before rising gradually over the next year or so.
This gradual improvement is predicated on a gradual recovery in dwelling investment and non-mining business investment, with household consumption picking up slightly, while Government net spending is expected to be very subdued (due to fiscal consolidation) and from rising mining and energy exports, the latter implied by comments about increased global supplies from Australia and elsewhere.
According to the NAB Analyst Team, “The RBA seems to have a much stronger GDP figure for the December quarter than do we at NAB, based on stronger exports from recent trade data, continued rising dwelling investment and stronger non-mining investment. We would agree about the stronger exports, but would note that imports fell substantially in the trade accounts and we expect this will show up in weaker, not stronger, business investment in the quarter. Also, it is not clear that there has been any significant lift in housing activity and anecdotal and NAB survey data recently has not supported stronger business investment outcomes.”
This gradual improvement is predicated on a gradual recovery in dwelling investment and non-mining business investment, with household consumption picking up slightly, while Government net spending is expected to be very subdued (due to fiscal consolidation) and from rising mining and energy exports, the latter implied by comments about increased global supplies from Australia and elsewhere.
According to the NAB Analyst Team, “The RBA seems to have a much stronger GDP figure for the December quarter than do we at NAB, based on stronger exports from recent trade data, continued rising dwelling investment and stronger non-mining investment. We would agree about the stronger exports, but would note that imports fell substantially in the trade accounts and we expect this will show up in weaker, not stronger, business investment in the quarter. Also, it is not clear that there has been any significant lift in housing activity and anecdotal and NAB survey data recently has not supported stronger business investment outcomes.”