RBA too complacent on households and inflation

Although the Reserve Bank of Australia (RBA) left interest rates at 1.5% for the 15th month today, we don’t think it is placing enough weight on the recent weakening in retail sales and softer news on inflation. If GDP growth and underlying inflation stay below 3% and 2% respectively next year as we expect, then the RBA probably won’t raise interest rates until late in 2019.

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