Australian Dollar Hits 1-Month High after RBA Quarterly Monetary Policy Statement
The Australian Dollar hit fresh 1-month highs after the Reserve Bank of Australia released its Quarterly Monetary Policy Statement.
In a surprisingly strong forecast, the central bank increased its 2011 estimate for GDP growth to 4.25% from 3.75%. The CPI forecast was raised from 2.75% to 3%, although the RBA sees the medium term inflation outlook as “broadly unchanged.”
Importantly, the RBA upped its growth forecast despite the negative impact from the Queensland floods, which are expected to subtract 0.5% from GDP, though the impact is split between 2010 (4Q) and 2011 (1Q). The RBA reiterated that it will “look through” the short-term effects of the floods, suggesting that rate hikes are perhaps more likely than some had thought.
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