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A man is reflected in a logo for the Australia and New Zealand Banking Group Ltd (ANZ) as he walks past a branch located in a Sydney suburb February 17, 2015. ANZ on Tuesday posted a 3.5 percent rise in first-quarter cash profit, warning that 2015 was shaping up to be a "slightly tougher, more volatile" environment. ANZ reported cash profit of A$1.79 billion ($1.39 billion) for the three months to Dec. 31, compared with A$1.73 billion a year ago, led by a strong domestic performance, while lower trading income and higher expenses hurt revenue growth.  REUTERS/David Gray     (AUSTRALIA - Tags: BUSINESS LOGO) - RTR4PV6V
A man is reflected in a logo for the Australia and New Zealand Banking Group Ltd (ANZ) as he walks past a branch located in a Sydney suburb February 17, 2015. ANZ on Tuesday posted a 3.5 percent rise in first-quarter cash profit, warning that 2015 was shaping up to be a "slightly tougher, more volatile" environment. ANZ reported cash profit of A$1.79 billion ($1.39 billion) for the three months to Dec. 31, compared with A$1.73 billion a year ago, led by a strong domestic performance, while lower trading income and higher expenses hurt revenue growth. REUTERS/David Gray (AUSTRALIA - Tags: BUSINESS LOGO) - RTR4PV6V

Australian Q4 GDP preview – ANZ

The ANZ Economics Team is forecasting a 0.5% q/q increase in Australia’s Q4 GDP today vs 0.4% expected, which would suggest that growth remains modestly below trend.

key Quotes

“ANZ is forecasting a 0.5% q/q increase in Q4 GDP (mkt: 0.4% q/q) following the 0.9% q/q rise in Q3. Year ended growth is expected to be 2.6% (mkt: 2.5%), suggesting that growth remains modestly below trend.”

“Overall, the key themes that have been in play for some time look to have persisted in Q4. Housing continues to be a key driver of growth, while consumer spending is improving (along with a better labour market). Business investment is weak, with mining investment falling away sharply and no pick-up in non-mining business investment in sight.”

“Net exports look set to be neutral in Q4, although this follows a strong 1.5ppt contribution in Q3. An in-line with consensus print will have few policy implications as it would be broadly consistent with the RBA’s 2½% y/y February SoMP forecasts.”

“More important for the RBA, however, will be incoming activity and inflation data. The Bank continues to maintain a watching brief on global developments, while the focus for the domestic economy remains on labour market developments.”

“Indeed, if the improvement in the unemployment rate stalls we expect, the RBA will feel uncomfortable sitting pat with inflation at the low end of the target band.”

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