Eurozone Bond Yields Fall as Oil Slump Eases Inflation Fears Ahead of Central Bank Meetings 
BSP Sees Philippine Inflation Easing, Keeps Policy Options Open 
China Set to Hold Benchmark Lending Rates Steady for 15th Month 
RBA Signals More Rate Hikes Possible as Australia Battles Stubborn Inflation 
Japan Government Backs Earlier BOJ Rate Hike as Inflation Pressures Build 
RBI Holds Repo Rate at 5.25% as Inflation Risks and Global Uncertainty Persist 
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RBA’s quarterly Statement of Monetary Policy (SoMP) underscored concerns over softer inflation outlook. Downward revisions to the Australian inflation and wage growth outlook raised doubts over the OZ nation’s economic growth prospects.
The Bank has cut its Dec-16 inflation forecasts by a full percentage point. Underlying inflation is now seen at 1-2 pct end 2016 (pvs 2-3 pct), 1.5-2.5 pct out to mid-2018 (pvs 2-3 pct). Inflation is set to miss its 2-3% target through the entire 2016 year. Outlook for wage growth was revised lower, and is expected to stay low for longer and then rise very gradually.
Elsewhere the Bank’s forecasts were largely unchanged. GDP growth in the near term was revised up as a result of the strong Q4 GDP print, but from Dec-16 onwards the numbers were unchanged. The unemployment rate forecasts were also broadly unchanged.
The Australian dollar remained relentlessly offered versus its American counterpart on the day after downward revisions to the Australian inflation and wage growth outlook. Such a large downgrade to inflation argues for a rapid shift down in the cash rate, and another cut in the near-term.
"We now expect another 25bp cut, most likely in August, but the possibility of a cut as early as June shouldn’t be discounted," said ANZ in a report.
