### POV: AU GDP SET TO EMPTY THE RBA'S GLASS....>

RBA: ### POV: AU GDP SET TO EMPTY THE RBA'S GLASS

- The latest AU GDP print missed exp., with growth in pvt consumption slowing,

potentially alluding to the wealth effect re: the housing market that the RBA is

worried about. This could keep the RBA's cash rate lower for longer, as it poses

a threat to the Bank's glass half full approach. Consumption added 0.2ppt to Q/Q

GDP, from +0.4ppt in Q2. Net exports only made a contribution to GDP as imports

fell, with the imports of consumption goods negative on the quarter.

- The RBA's most recent MonPol decision saw it reiterate that "the central

scenario is for GDP growth to average around 3.5% over this year and next." The

Bank requires a GDP print of around 1.3% Q/Q in Q4 to achieve this, which is

somewhat unlikely. This may trigger a downgrade to its GDP outlook when it

issues its next set of econ projections in Feb.

- Markets now price a 44% chance of the RBA staying on hold through 2019 (based

on BBG's WIRP function), with some analysts already pushing back their exp. for

a hike from the RBA in the wake of the GDP print. AMP Capital's Shane Oliver now

believes that next move in the cash rate will be lower.