Focus On RBA As Meeting Communication Changes

The focus of this week in Australia will be Tuesday’s RBA decision. While rates are unanimously expected to be left at 4.35%, attention will be firmly on the updated forecasts and Governor Bullock’s press conference at 1530 AEDT to ascertain how comfortable the Board is that it will achieve its inflation target in a “reasonable timeframe”. Bullock appears before the House of Reps Economics Committee on Friday.

• Monday sees December trade data released and after the surplus widened sharply the previous month, a small narrowing to $10.5bn is forecast.
• The Melbourne Institute inflation gauge for January prints Monday too. December rose to 5.2% y/y, well above the CPI at 3.4%.
• Final January Judo Bank composite/services PMIs are also at the start of the week. The preliminary reading improved but was still in contractionary territory.
• Q4 real retail sales are published on Tuesday and are expected to follow Q3’s small rise with another one of 0.1%. Nominal sales rose 0.5% in Q4 and deflating with both goods prices and our retail price proxy suggests that sales volumes were close to flat.