RBA: what are the upside risks? - Nomura

Ross J Burland FXStreet

Analysts at Nomura offered a review on the latest developments in the RBA's policy and main downside/upside risks.

Key Quotes:

"The central bank continues to balance growth, inflation and financial stability objectives."

"Its 6 February press release suggests increasing confidence in the global and local growth backdrop, and possible modest upward revisions to its domestic GDP forecasts.'

"However it still expects inflation and wage growth to rise only “gradually”. Moreover, with inflation below target over the past eight quarters and house prices continuing to soften a little, we expect it to continue to display patience, not hiking until February 2019."

"We also believe it remains mindful that Australia’s largest trading partner, China, is undergoing a delicate phase of deleveraging, and that medium-term risks from this source remain."

Risks: The main downside risks stem from domestic housing, the global market or a (medium-run) China dislocation. Higher commodity prices, stronger-than-forecast capex and infrastructure, and continued strong employment reports are upside risks."

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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