RBA left cash rate unchanged at 0.75% as widely expected. In the accompanying statement, it noted that rate cuts since June are supporting employment, income growth and return of inflation to target. But given global developments and domestic spare capacity, ” it is reasonable to expect that an extended period of low interest rates will be required”. The central bank also maintained it’s “prepared to ease monetary policy further if needed”.
Outlook for the Australian economy is “little changed” from three months ago. The central scenario is for the economy to growth by 2.25% in 2019 (slight downgrade from 2.5% as mentioned in August), and then gradually pick up to 3% in 2021. Unemployment rate is expected to remain at around 5.25% for some time, before gradually declining to a little below 5% in 2021.
Inflation data were “broadly as expected”. Central scenario remains for inflation to pick up, “but do so so only gradually”. It’ expected to be close to 2% in 2020 and 2021. Back in August, RBA said “inflation is expected to be a little under 2 per cent over 2020 and a little above 2 per cent over 2021.”
