The RBA cut rates by 0.25% to 2½% on 6th August and has maintained an easing bias since then. The growth and inflationforecast updates provided in today’s release of the November quarterly Statement on Monetary Policy (SMP) have GDPgrowth “moderately weaker” in the near term and inflation “broadly unchanged”. The short term forecasting horizon (ie Dec2014) has lowered non-farm GDP growth to 2-3% from 2½-3½% in the August SMP. But the medium term forecastinghorizon (year to Dec 2015) has the non-farm economy running in a 2¾-4¼%pa band and underlying inflation in the 2-3%target range. Thus nothing in the November SMP has changed the status quo of an easing bias still bolted in place.Providing forecast bands rather than point estimates is a fair reflection of the risks beyond the very short term. But it doescloud the policy signals. The RBA sees risks in both directions around the forecasts.
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Commonwealth Bank