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In view of Felicity Emmett, senior economist at ANZ, there was very little substantive change to the RBA’s post-meeting statement, although in a nod to the recent data weakness the Bank did acknowledge that growth had slowed in H2 2018.

Key Quotes

“It signalled that it remains optimistic about prospects for 2019. Given the recent loss of momentum, however, we think it could be a challenge to achieve the Bank’s 3% forecast. In particular, its oft-repeated line that a pick-up in household income growth will support consumer spending continues to look ambitious, with the improvement in average wages growth persistently disappointing.”

“The RBA is waiting for the Q4 national accounts tomorrow before revisiting its forecasts; but it is likely to be disappointed, with its forecast of 0.6% q/q growth in GDP looking too high. Our forecast is for growth of 0.2% q/q and 2.4% y/y. While there may be some one-offs in the soft result, there does seem to have been a genuine loss of momentum, although the outcome for consumer spending (for which we have little information) will be of primary importance for the Bank’s outlook.”