Menta, it's obvious the RBA can't see deflation as a domestic problem in the short term
As the AUD drops inflation is built in but the bank re-iterated that unemployment will increase over the next several+ quarters. So the logic is: as the AUD drops, goods become dearer, inflation goes over 3%, retail sales increase but unemployment increases.
??
How can our economy look to be picking up? Perhaps the statement was a peek into the next few months. If the economy grows as the bank thinks it will and unemployment rises with inflation why would the RBA raise interest rates in an environment?
It's the old CBs delema: jobs or inflation
The statement was a shaky bit of hope on one sheet of guesswork.
There is still plenty of room for emerging markets to falter and the global economy is still reeling from the QE pull back in the US.
Only the hopelessly optimistic could see sunshine and not the approaching storm, Glenn.
