By Michael Witts

What was discussed at today’s RBA meeting? Were there any changes compared with previous statement?

The Statement from the RBA, while similar to previous statements, did suggest a couple of slight changes at the margin.

In terms of the international economy, the Bank suggested that the disinflationary period of the past few years may be coming to an end. They observed that the inflation outlook is more balanced than it has been for some period.

In addition, global labour markets appear stronger, and the Bank notes the increase in global bond rates following the US election.

The RBA appears to telegraph a lower September quarter GDP print, due on Wednesday, when they comment that growth will likely slow into the year's end before picking up again. Current market forecast suggests that the quarterly print will be low – close to zero. 

Such an outcome will see annual growth back around 2.5%, compared with 3.3% in the June quarter. Forecasts for 2017 as a whole suggest growth back towards 3% plus.

What is the RBA’s view on property and outlook for property in 2017?

The RBA highlighted that the housing market is highly segmented – in some markets prices are rising briskly, while in others they are declining – and notes that lenders have begun to decrease their new lending activities in certain segments. In this context, apartments on the East coast come to mind.

The Bank also suggests that market discipline will eventually have an impact. This, when combined with supervisory activities, will likely see a slowdown in market activity and price growth accordingly.

What is the RBA’s view on Australia’s economy and the global economy? 

The Bank appears quite comfortable with the economic outlook for both the global and the local economy.

While there may be a dip in reported growth in Australia into year's end, the RBA believes the economy has sufficient momentum to move into 2017  with a strong set of economic fundamentals.

In addition, the “go for growth” strategy espoused by President-elect Trump will likely provide a boost to the US economy and the broader global economy. In this context, commodity prices have been improving through a combination of strong demand and supply reductions, together with anticipating stronger world growth.

What is ING DIRECT’s outlook for the Australian economy, global economy and the Australian dollar in 2017? Can we expect a cash rate rise/cut in 2017?

At ING DIRECT we are reasonably optimistic regarding local and global economic prospects over the year ahead.

We anticipate the US Federal reserve will tighten monetary policy at its December meeting. Progressively, over the first half of 2017, the policy direction of the Trump presidency will become clear. If policy promises match policy actions, a big risk in some key elements, the US economy maybe on a strong growth path. However, it’s at what cost from a budget and broader debt viewpoint.

These elements combined should see a stronger US share market and stronger USD. This risk is that the markets have already factored in these developments and potentially more, therefore the risk is ‘buy the rumour and sell the fact’ after President Trump takes office.

This will likely see the AUD at around current to slightly lower levels over the first half of 2016.

Against the background of stronger domestic and global growth, we would suggest that the RBA will be on hold for much of 2017. The risk is that towards the back end of 2017, pressures may emerge for the RBA to opt for a rate increase.

What does the election of Donald Trump as President of the United States mean for Australia’s economy?

In general terms, it could be a positive impact as it is expected to lead to stronger world growth and, through the flow on effect for commodity prices, boost the domestic economy. 

The question will be whether Trump the candidate is different to Trump the president and, if so, what is the impact?