RBA: Inflation front at the core - ANZ

Research Team at ANZ, notes that the Australian April Labour Force report showed that labour market conditions remain okay, but momentum has slowed.

Key Quotes

“Although labour market indicators are somewhat mixed, we continue to expect the unemployment rate to remain close to the current 5.7% for the rest of the year.

The job numbers are unlikely to change the RBA’s view on the policy outlook; its focus is firmly tilted towards inflation. The RBA recently significantly downgraded its expectation for underlying inflation. The central bank is currently expecting core inflation “to remain around 1-2 per cent over 2016 and to pick up to 1½-2½ per cent at the end of the forecast period”. Such a low inflation profile means further easing is almost guaranteed. We expect another 25bp cut, most likely in August.”