RBA's (SOMP): trims inflation forecasts, underlying inflation not expected to reach 2 pct until early 2019

In today's Reserve Bank of Australia's quarterly Statement on Monetary Policy (SOMP), where the Bank changed its policy of using forecasting 'ranges' and instead use central forecasts, AUD/USD has dropped a hadfull of pips into the 0.70's from a starting point of 0.7683 in a relatively balanaced set of headlines that have not vered far from expectations, although the bank has losened its inflation forcasts, "underlying inflation not expected to reach 2 pct until early 2019".

Headlines from the SOMP as follows:

Has held rates steady to provide "Appropriate support" to the economy.

RBA lowers inflation forecasts, underlying inflation not expected to reach 2 pct until early 2019.

RBA forecasts underlying inflation at 1.75 pct to dec 2018, then 2 pct to dec 2019.

RBA forecasts cpi inflation at 2 pct to june2018, then 2.25 pct to dec 2019.

RBA estimates cpi reweighting means underlying inflation overstated by 0.3 ppt.

RBA: entry of foreign retailers to constrain retail inflation.

RBA forecasts gdp growth 2.5 pct dec 2017, 3.25 pct dec 2018, 3.25 pct dec 2019.

Key notes:

• RBA in no rush to hike rates – UOB
• RBA not following the Fed - Rabobank
• Neutral RBA to sit tight until 2018 - TDS
• AUDUSD: The dailies appear to be turning a little more positive

RBA policy statement:

The RBA Monetary Policy Statement released by the Reserve bank of Australia reviews economic and financial conditions determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. It is considered as a clear guide to the future RBA interest rate policy. Any changes in this report affect the AUD volatility. If the RBA statement shows a hawkish outlook, that is seen as positive (or bullish) for the AUD, while a dovish outlook is seen as negative (or bearish).