From the Shadow RBA today:
Stronger than expected economic growth provides welcome news to the Australian people. Coupled with a lack of new data on inflation, the unemployment rate hardly moving and no clear direction for the global economy, the CAMA RBA Shadow Board’s conviction that the cash rate should remain at its current level has weakened a little. The Shadow Board attaches a 59% probability to a rate hold being the appropriate policy setting. The confidence attached to a required rate cut equals 4%, while the confidence in a required rate hike equals 37%.
The Australian economy expanded 1.1% in the last quarter of 2016, more than the forecast 0.7% and a welcome reversal of the contraction in the previous quarter. This is good news but it remains to be seen whether strong growth can be maintained throughout the year.
