We have to make forecasts but they are inherently difficultThe further out you forecast, the bigger the error bandWe use the market pricing as part of our cash rate forecastThe forecast and pricing of the current cash rate path is as good as anyBut we are prepared to move if the data suggests to do soConsumption remains a possible downside risk that could change our mind to act quickerProductivity and wages are also another considerationOverall risks are fairly balanced on inflation, policyWe can’t ignore risks from overseas developments but our main focus is on the domestic front
There’s not much of anything new as the main takeaway is that she is emphasising that they are flexible to move earlier if the data warrants it to be the case. But for the time being, policy settings are what they would deem to be appropriate. AUD/USD remains little changed, up just 0.1% to 0.6592 currently.
This article was written by Justin Low at www.forexlive.com.
