Week in review
- Australia retail sales weak at 0.2% m/m
- RBA keeps rates on hold, downgrade growth outlook
- U.S. non-manufacturing ISM index picks up to 54.7
- NAB business confidence
- Westpac consumer confidence
- Australia labour market report
Thought of the week
The RBA is still banking on the gentle turning point in the economy. The updated projections from the RBA’s Statement of Monetary Policy lowered growth expectations into the middle of next year before the economy returns to an above potential 3% pace of growth by 2021. Trouble is, this isn’t expected to create any more inflation, in fact, core inflation is not expected to be back above 2% until the end of 2021. These projections include the assumption that the cash rates moves in line with market pricing. Right now, futures markets are pricing in a more than 50% chance of another rate cut in the first half of 2020. The RBA may have entered the pit lane on rate cuts in October, but the race downward in rates is still on.
RBA still expecting a gentle turning point
Real GDP growth, year-over-year change
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