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The Reserve Bank of Australia (RBA) is expecting a gradual decline in unemployment to 5 percent over the next couple of years, according to the October policy statement. However, the central bank does not see the labor market tightening translating into wage price inflation for a while.  

Key points (Source: Reuters)

  • Low rates supporting economy
  • Progress on unemployment, inflation expected to be gradual
  • GDP growth to average a bit above 3 pct in 2018, 2019
  • Business conditions are positive
  • Housing markets have slowed in Sydney, Melbourne
  • Public infrastructure investment supporting economy
  • Household consumption a source of uncertainty
  • Outlook for labour market remains positive
  • Credit conditions tighter than they have been for some time
  • Expects inflation to be higher in 2019, 2020
  • Further gradual decline in unemployment expected over the next couple of years to 5 percent
  • Wage growth remains low, likely to continue for a while
  • AUD remains in range of past couple of years
  • AUD has fallen against US dollar, along with most other currencies
  • Drought has led to difficult conditions in farm sector