In RBA’s latest Statement on Monetary Policy, economic projections were largely unchanged. Overall, the projections are slightly more positive than expected. But there wouldn’t be any change to the expectation that RBA will stand pat throughout 2018, at least. There was no downward revision in GDP forecast. Underlying inflation forecasts were revised slightly up. On the negative side, unemployment rate will take longer to drop again.
And as noted in the statement, RBA said “the forecasts reflect the expected decline in spare capacity in the economy as GDP growth picks up and as the labour market moves towards full employment.” And, “a key area of uncertainty for the inflation outlook is around how quickly wages growth picks up in response to improving labour market conditions.”
Year-average GDP growth is forecast to be at 3.00% in 2018 and 3.25% in 2019. CPI inflation is forecast to rise to 2.25% at 2018 year end and stay there till June 2020.
The first change is that unemployment rate forecast was raised to 5.50% in June 2018 and December 2018, revised up from 5.25%. Onwards, unemployment rate is projected to drop to 5.25% in June 2019 and stay there till June 2020.
The second change is that underlying inflation is expected to be higher at 2.00% in June 2018 and December 2018, revised up from 1.75%. Then underlying inflation is projected to stay a 2.00% till picking up again to 2.25% in June 2020.
Below are the most updated forecasts.
Here are February projections.
