SOMP shifts inflation expectations slightly up

The Statement on Monetary Policy from the RBA today has changed very little from the previous release in August. A somewhat lower A$ has led to some minor upward revisions to inflation expectations (previously mid-2015 core inflation was forecast at 1.75 – 2.75%, now that’s 2-3%. All forecasts from then out to end 2016 have been increased by 0.25%). GDP forecasts have been left unchanged. The two graphs below, taken from the report, show the central forecast as well as the 70% and 90% confidence intervals (the ranges within which the RBA are 70% and 90% confident the actual result will fall) for both GDP and core inflation.

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