MNI BRIEF: RBA Watching Fresh Data For Feb QE Decision

Fourth quarter inflation data and labour market data for December and January are likely to influence the Reserve Bank of Australia when it next meets in February to review its bond buying program.

The minutes of the December 7 RBA board meeting, released on Tuesday, show the bank is considering three options for its bond buying program, which is proceeding at the rate of AUD4 billion per week and will be reviewed in February.

If the economy is proceeding as forecast in the November Statement of Monetary Policy, the RBA is likely to reduce the rate of purchases and end the program in May. But a better performing economy could see an end to purchases in February, and if it underperforms then the likely option will be to reduce the purchases and schedule a May review.

Trimmed mean inflation for Q3 came in at 2.1%, with the RBA forecast at 2.25% for Q4. Unemployment is already ahead of forecast with November unemployment at 4.6% against the RBA December forecast of 4.75%.