Reuters – BIS (BIS) is on track to earn a record $4 billion in 2019 and $1 billion more than 2020 in its first quarter, with the central bank predicting a “tremendous” rebound in inflation.BIS, which is in its fourth year of independence, said it had revised down its first-quarter 2019 forecast from $4 trillion to $3.7 trillion.
The bank has raised its forecasts for 2020 and 2021.
Bis said its quarterly financial outlook for the year ended December 31 was unchanged at 1.7 percent.
The bank forecast that inflation would remain below the ECB’s target of 2 percent.
“We remain confident in our inflation outlook and expect inflation to return to the ECB target in 2019-20, as the ECB has signaled its intention to hold interest rates at very low levels in 2019,” BIS said.
The BIS forecast a 4.5 percent rise in inflation in 2019.
That was up from 3.6 percent in the previous quarter.
Brisbane-based BIS expects inflation to reach 4.4 percent in 2020 and 4.1 percent in 2021.
The central bank said it expected the price index for the Australian dollar to grow at a compound annual growth rate of 7.3 percent in 2019 as inflation increased by about 5 percent.
Bonds also rose by 1.1 percentage points to 6.9775 per dollar.
On Tuesday, BIS published its second-quarter forecasts.
“In 2019, we forecast inflation to remain below target for the first quarter and, with an outlook for further accommodation in the medium term, we expect inflation over the medium and longer term to remain low,” Bismarck-based bank BIS AG said in a statement.
BIS expects to return inflation to its target of 3.8 percent in 2023, which would be its lowest inflation rate since the end of World War Two.
Bismarack-based central bank governor Peter Sutherland said inflation is unlikely to hit that target for some time.
“It’s a very, very difficult thing to achieve and we’re very pleased to see inflation on the rise,” he said.
‘Wishlist’ for 2018The ABS expects to report in the fourth quarter on the number of people who applied for unemployment benefits in the first three months of next year.
There were 2.4 million applications in the three months to December 31, up from 1.5 million the same period last year.
The ABS said it was anticipating an increase in the number from 3 million applications to 3.3 million by the end, although the figure could be more than double that.
The bureau expects unemployment benefits to reach 1.8 million by 2020.
“The labour market is currently challenging, with a range of job pressures and concerns about the impact of the global economic slowdown,” the ABS said in the statement.
“There are several challenges that we see with unemployment benefits, including the low availability of jobs, limited eligibility, low eligibility caps, limited employment opportunities, the cost of benefits, and the need to manage the labour market as a whole.”
The ABS also said it expects there to be a drop in employment in the services sector and construction.