MNI 5 Things: Growth Outlook,Trade Tensions Imp In RBA Minutes

By Sophia Rodrigues

     SYDNEY (MNI) - The Reserve Bank of Australia will release the minutes of

the March 6 board meeting later Tuesday at 1130 hours local time. Following are

the five things we would be looking for:

     --Ahead of the board meeting, global trade tensions was the dominant fear

among markets. It is likely that this was discussed at the meeting and we will

looking at what shape the discussion took and how the RBA is characterizing the

risks for the Australian economy.

     --Outlook for domestic growth after the RBA said the central forecast is

for the Australian economy to grow faster in 2018 than it did in 2017. That

statement indicated some downgrade in growth outlook because of expectation that

Q3 GDP will be weaker than RBA's forecast but Governor Philip Lowe said that if

it were the case, it still doesn't change growth outlook.

     --Discussion around wage growth given Q4 wage price index was published in

mid-February. The outcome was slightly more than market expectation but didn't

change their view on future pace of wage rise. Following the release of Q3 wage

price, the RBA maintained the forecast was for wage growth to increase gradually

over the next year. In February it pointed to downside risk from new enterprise

agreements that have lower wage increases compared to the ones they are

replacing but also discussed the possibility that ongoing strength in labor

demand might result in wage growth picking up by more than anticipated.

     --Any forward guidance on monetary policy because the day after the board

meeting, RBA Governor Philip Lowe appeared to have strengthened the guidance

about next interest rate move likely being up, not down. Apart from pointing to

progress towards growth, employment and inflation goals, Lowe also said interest

rates are still very low.

     --Discussions around housing market as the cash rate statement specifically

pointed to slowing in housing markets in Sydney and Melbourne.

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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