AMP Capital’s senior economist has criticised the Reserve Bank of Australia for having too rosy a view in its latest growth and inflation forecasts.
In a statement, AMP Capital senior economist Diana Mousina said the RBA’s updated growth and inflation forecast, released on Thursday, “remains upbeat,” much like previous statements.
“The RBA left its growth forecasts unchanged, still expecting that GDP growth will rise to over 3 per cent (above its potential rate) over the next year as the tail end of the mining investment drag ceases and consumer spending and non-mining business investment lift,” Ms Mousina noted.
However, AMP Capital disagreed with the central bank’s position, she said.
“We think the RBA’s forecasts are too optimistic and we see GDP growth tracking around 2.7 per cent over the near-term.
“We remain cautious around the outlook for consumers, in an environment of low wages growth and slowing home price growth.
“The current lift in government infrastructure will support near-term growth, but the pipeline of projects under construction will start to wane in the second half of 2019.”
RBA’s output growth and inflation forecasts for December 2018, June 2019, December 19 and June 2020 were 3.25 per cent, 3.50 per cent, 3.25 per cent and 3 per cent, respectively.
“Our view is that domestic GDP growth will disappoint the RBA’s forecasts over the near-term and keep pressure on the central bank to keep interest rates low,” Ms Mousina concluded.
AMP Capital does not anticipate the RBA would look to hike rates “until 2020 at the earliest”.