The Statement on Monetary Policy (SoMP) is released each quarter and it is closely watched for the updates to the RBA’s own forecasts.
In this quarter’s Statement, the RBA has increased its underlying CPI forecasts to June 2018 and December 2018 while it has also increased its unemployment rate forecasts for the same periods. GDP forecasts remained unchanged for GDP growth and headline inflation.
Some economists have found the RBA’s logic in this regard to be questionable. Bill Evans, Westpac chief economist, is one such economist. He has an issue with the concept of higher inflation rates in the context of higher unemployment rates. “The inflation and unemployment forecast changes seem somewhat inconsistent. A reasonable recognition of the slowdown in employment growth this year might have been more consistently communicated if the inflation forecast had not been increased. In particular, it seems a little bizarre to expect underlying inflation to print 2% from a 1.3% base over the last 9 months.”