On Monday, Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser delivered a speech at the Economic Society of Australia Business Lunch in Brisbane, sharing key insights and forecasts for the economy.
Key quotes
Economic forecasts are subject to huge uncertainty.
Assume inflation stickiness due to weaker supply, labor market tightness.
But spare capacity could easily be much higher, or much lower than we assume.
Assume unemployment will rise only slowly, but risk of faster increase.
Assume household consumption to rise in line with real incomes.
Risk consumption could rise more strongly, in part due to increase in wealth.
Uncertain how far and fast savings rate might rise.
Market reaction
AUD/USD is holding onto moderate gains post the speech, currently trading 0.20% higher at 0.6585.
Analysis
The speech highlighted the uncertainty surrounding economic forecasts, indicating potential risks and assumptions in key areas such as inflation, unemployment, consumption, and savings rates. This uncertainty can impact market sentiment and the performance of currency pairs like AUD/USD. Investors and traders should closely monitor economic data and central bank actions to make informed decisions in volatile market conditions.