SoMP Will Update RBA Forecasts, Although Tuesday's Statement Already Revealed Some Changes

The RBA Statement of Monetary Policy is due at 11:30am AEST (02:30 BST). The market will look at the RBA forecasts and commentary for clues around the policy outlook after Tuesday's surprise +25bps hike.

• This is a link to the Feb set of forecasts from the RBA. Note Tuesday's RBA statement already gave some indication of forecast changes.
• End-2023 CPI forecasts were revised down to 4.5% from 4.8%, although the RBA stated the May hike was aimed at ensuring high inflation didn’t become “entrenched” and the warning regarding the dangers of high inflation was reiterated.
• In terms of GDP growth, it is expected to stay positive but below trend and forecast to be 1.25% this year (revised down) but around 2% y/y in mid-2025, which has been revised up.
• The forecast unemployment rate in mid-2025 was left unchanged at around 4.5%.
• We noted in out RBA Review (see this link) "The rate outlook is likely to depend heavily on the quarterly CPI releases, as they include services whereas the monthly one doesn’t, and the RBA’s quarterly forecasts to ensure that inflation will return to target as expected. Unless there is a significant surprise on the monthly data front, then the next “live” meeting is August as Q2 CPI prints on July 26 and new forecasts are due at that decision. There is a significant chance of another hike at this meeting if Q2 services inflation doesn’t ease and the forecasts suggest there’s a risk the target won’t be met by mid-2025."
• Hence any commentary that gives insight to these points are likely to be in focus.