MNI 5 Things: Looking For Overall Optimism in RBA Policy

By Sophia Rodrigues

     SYDNEY (MNI) - Following are the five key things we would be looking for in

the Reserve Bank of Australia's Statement on Monetary Policy due at 1130 hours

Sydney Friday (0130 hours GMT):  

     --Both headline and underlying inflation forecast for June 2020 which is

the end period of published forecasts. Expectation is for the forecasts to be

maintained at 2.25% but there's a small chance it may be raised to 2.5%. If it

does it would be viewed as hawkish and without it, the balance of risks on

inflation will be important comments to watch for.

     --Discussion on rise in money market rates and how persistent the RBA

thinks it is, and how much it impacts funding costs of banks. The RBA may

discuss the likely (and unlikely) flow-on impact of the higher funding costs on

overall funding costs, mortgage and business lending rates, and deposit rates.

Also any discussion on tightening credit standards.

     --Discussion on spare capacity in the economy beyond the labor market and

related to this, upgraded view on non-mining investment.

     --How RBA characterizes the risks from slowing housing market

     --The RBA's upgraded view on global inflation with higher oil and base

metals included in the discussion, monetary policy moves by global central banks

and its impact on Australian dollar.

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

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