(May 6 Friday) The Reserve Bank of Australia released the minutes of their May monetary policy statement and lowered their Inflation forecasts across the profile, while the GDP forecast is mostly unchanged. The RBA sees the underlying infaltion at 1-2% in 2016 (from 2-3%) and 1.5 - 2.5% out to mid 2018 (from 2-3%) The forecast for June 2017-2018 is at 1.5% - 2.5%.
There was no material change to GDP growth and the jobless rate forecast depsite the above trend of GDP and the employment rate. The RBA said they will continue to assess the outlook and adjust monetary policy as needed. There is broad based weakness in local cost pressure on CPI. There is no upward revision in iron ore and coal. The RBA also cited the key uncertainy in China outlook & debt impact.
The australian dollar immediately came under selling pressure and fell from 0.7465 to 0.7420 on the initial reaction to the RBA news.The aussie fell further to 0.7360 in Europe. The market now awaits the U.S. April Employment data. NFP is expected to be +200k from +215k.