Annette Beacher, Chief Asia-Pacific Macro Strategist at TD Securities, points out that the marquee annual Anika Foundation speech saw the RBA Governor tip toe closer to a vision of a Goldilocks economy by 2020.
Key Quotes
“The Governor has signalled that the RBA expects (1) GDP growth to remain ‘a bit above 3%’ this year and next; (2) the unemployment rate is expected to be a full-employment 5% by 2020; and (3) inflation is expected to return to mid-target 2 ½% by 2020. With all this revealed already, there can’t be much new news in Friday’s Statement on Monetary Policy.”
“The speech was typical upbeat Dr Lowe style: debt position of households is improving; population growth sets Australia up well; labour market is tightening; inflation target to be reached in two years; and concluding that the next move likely remains up for the cash rate.”
“It was surprising that AUDNZD dipped back to 1.10, as the RBA has the hawkish edge. However, perhaps some positions were taken off the table ahead of the wildcard RBNZ Governor Orr tomorrow.”
“A tidbit: Dr Lowe’s patience was made abundantly clear: he said “time” 17 times in the speech, such as “time will tell” and “over time”. It has replaced “gradual”, used 3 times.”
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