Below trend growth to continue
Economy a little ahead of RBA forecast track.
• Despite the continuing headwinds from declining resource investment and the fall in Australia’s terms of trade, the economy’s positive growth rate continued through the September quarter.
• Speaking to a business breakfast in Perth last Wednesday, RBA Governor Stevens said in quick response to then just-released GDP figures that the figures were “not a bad outcome” and that Q3 economic growth of 2.5% was just a little bit below trend.
• We also had confirmation last week from Fed Chair Janet Yellen that the Fed is on track to announce lift-off at its FOMC meeting next Tuesday-Wednesday.
• Budget MYEFO looming next week: Iron ore price forecast set to be lowered, though not slashed. AUD “technical assumption” will also need adjustment, already averaging below the May Budget’s “assumption”. We also note that the non-mining economy and the labour market are tracking better than Budget expectations.
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