Everybody heads-up
*(AU) RBA QUARTERLY MONETARY POLICY STATEMENT: AU'S INFLATION PRESSURES MAY HAVE BEEN CONTAINED (CUTS INFLATION FORECAST)
**Wages
- Cautious wage growth likely to remain at above average levels
- Wage growth has stopped rising, but still high
**Inflation
- Core inflation will be lower in medium term and inflation at upper end of target for next few years
- Q4 PPI and CPI suggest inflation pressures contained
- Kept rates on hold due to slower than expected inflation
- 2007 inflation to be 2.75% (core)
- Headline CPI to be 1.75% in year to June 2007 and headline CPI to be 2.25% in yr to December
- Upstream pricing pressures are strong and capacity utilization to ease only modestly
- Headline inflation to be 2.5% to 3% in 2008
**Growth
- Growth has moderated from unsustainable pace
- Drought may cut 0.5 percentage points from GDP
- Consumer and Business borrowing have moderated
- Domestic demand to be at or slightly below trend
- Business Invesment growth is moderating
- Non farm GDP to be about 3.25% in 2007 and 2008 and total growth to be a tad higher<AUD/USD AUD/JPY>