RBA lowers inflation forecasts, AUD under pressure, again

RBA, cuts inflation forecasts, GDP forecasts mostly unchanged. Year average for 2016 revised up 0.5 ppt.

Underlying inflation seen at 1-2 pct end 2016 (pvs 2-3 pct), 1.5-2.5 pct out to mid-2018 (pvs 2-3 pct).

GDP seen at 2.5-3.5 pct end 2016 out to end 2017, 3-4 pct to mid-2018.

CPI data showed broad-based weakness in domestic cost pressures, slow growth in labour costs.

Outlook for wage growth revised lower, to stay low for longer and then rise very gradually.

RBA also cites retail competition, softer inflation in rental & home building, falling fuel & utility costs.

Inflation expectations in Australia below average, but have not declined as much as elsewhere.

Unemployment seen around current rate to mid-2017, before declining gradually.

Q1 GDP growth seen around same moderate pace as previous quarter

Household consumption to be a bit above average.

Outlook assumes recent rises in bulk commodity prices are not sustained, lng prices seen higher.

Most of decline in mining investment to be over by end 2016, non-mining still subdued.

Ootlook for growth in Australia's major trading partners revised a little lower.

The pressure on AUD remains