- Reserve Bank of Australia
The Reserve Bank of Australia continues to monitor closely developments in global markets and stands ready to lower interest rates further if the economy requires additional support. The central bank has held the official cash rate unchanged since May but indicated that it is keeping an easing bias, with soft domestic inflation providing the bank scope to offset the impact of weaker global conditions on the nation's economy. The cash rate was left at a record-low 2.0% for the eighth meeting in a row in February, the bank's first meeting of the year. The officials judged that there were "reasonable prospects" for growth in the Australian economy, and that employment had been stronger than previously estimated. One major risk to Australia's growth outlook is the recent turbulence in global financial markets, resulting from concerns over China's economy. Market wobbles in China have seen its share market plunge, capital flee at a record pace and the slowest growth pace last quarter since 2009. The RBA, however, said China's officials had scope to respond to an economic crisis, but added any sharp slowing in China's economy would have spill-over effects for the region, including Australia.
Economists continue to expect further rate cuts in the second half of the year as headwinds to growth stiffen, and hiring slows.
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