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
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