RBA Governor Philip Lowe said today that the central scenario for 2019 is for growth of around 3%, inflation of around 2%and unemployment of around 5. And “this is not a bad set of numbers”. However, what is more of concern is the “accumulation of downside risks”.
The first major area of risks globally is “political risks” including US-China trade and technology tensions, Brexit, rise of populism and strains in some wester European countries. Second area of international risk is China slowdown. Domestically, RBA board has recently been paying “particularly close attention” to household spending and housing market. Lowe noted that ” underlying trend in consumption is softer than it earlier looked to be”. Decline housing prices could also affect overall spending.
On monetary policy, Lowe reiterated that “the probability that the next move is up and the probability that it is down are more evenly balanced than they were six months ago.”
