RBA SoMP: committed to do what i can to support jobs, June unemployment expected at 10%

The Reserve Bank of Australia has published its May Statement on Monetary Policy.

Markets are looking through the update for variations on the RBA's forecasts for an outline the Bank’s expectations for the profile of the coronavirus shock and recovery. The following are the main points:

Statement on Monetary Policy

Will maintain its efforts to keep funding costs low in Australia and credit available to households and businesses - Reuters news.

RBA says: Will not increase the cash rate target until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2–
RBA says: Pace of recovery in the labour market is uncertain.

says: under the baseline scenario, unemployment begins to gradually decline from later this year
07-may-2020 19:31:48 - rba says: year-ended headline inflation is expected to turn negative in the june quarter, for the first time since the early 1960s
07-may-2020 19:32:03 - rba says: trimmed mean inflation is also expected to be lower (but still positive) in the june quarter, to be around 1½ per cent over the year
07-may-2020 19:32:32 - rba says:  from this low point, inflation is likely to increase gradually, but in this baseline scenario it is likely to remain below 2 per cent for some time
07-may-2020 19:32:46 - rba says: ongoing spare capacity in the labour market is likely to result in a period of slower growth in wages and thus labour costs

What we did know before the release, from a brief statement by Governor Lowe who provided the broad outline as follows:

In the baseline scenario, output falls by around 10 per cent over the first half of 2020 and by around 6 per cent over the year as a whole. This is followed by a bounce-back of 6 per cent next year.

How has AUD reacted? 

More to come...

Meanwhile, trade wars are back on and that could spell danger for this meanwhile phase of risk-on in the markets: AUD/JPY heading into the eye of the perfect storm

Description of the RBA Monetary Policy Statement

The RBA Monetary Policy Statement released by the Reserve bank of Australia reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. It is considered as a clear guide to the future RBA interest rate policy. Any changes in this report affect the AUD volatility. If the RBA statement shows a hawkish outlook, that is seen as positive (or bullish) for the AUD, while a dovish outlook is seen as negatvie (or bearish).