RBA: Central scenario for GDP growth has been revised up further

Following are the key headlines from the May RBA monetary policy statement, via Reuters, as presented by Governor Phillip Lowe.

Board will not increase cash rate until actual inflation is sustainably within 2-3% target range.

Central scenario for GDP growth has been revised up further, with growth of 4¾ percent expected over 2021 and 3½ per cent over 2022.

Wages growth will have to be material higher than it is currently.

Unemployment rate is expected to continue to decline, to be around 5 per cent at the end of this year and around 4½ per cent at the end of 2022.

A pick-up in inflation and wages growth is expected, but it is likely to be only gradual and modest.

Board is not considering a further extension of term lending facility.

Inflation in underlying terms is expected to be 1½ percent in 2021 and 2 per cent in mid-2023

Its July meeting, the board will consider whether to retain the April 2024 bond as the target bond for the 3-year yield target or to shift to the next maturity.

CPI inflation is expected to rise temporarily to be above 3 percent in the June quarter because of the reversal of some COVID-19 related price reductions.

The board is not considering a change to the target of 10 basis points.

Bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained.

At the July meeting, the board will also consider future bond purchases following the completion of the second $100 billion of purchases.

Australian dollar remains in the upper end of the range of recent years.