The RBA has again lowered its forecasts for GDP growth in the latest quarterly Statement on Monetary Policy. While most of the forecast ranges are unchanged, the estimate for GDP to the end of December 2015 was increased by 0.25%, while 2017 forecasts were trimmed. Yet, unemployment is forecast to fall further with the services sector the driver behind the rate falls.
The Statement suggests some of the price increases for imported goods and services coming from a lower exchange rate is being passed on to consumers and it expects the exchange rate to place pressure on the prices of imported goods over the next few years. Even so, underlying inflation is expected to remain low. CPI forecasts are essentially the same, with inflation expected to be consistent with 2%-3% band.
