- Reserve Bank of Australia
The Reserve Bank of Australia lowered its economic growth and inflation forecasts over coming years, underscoring uncertainty over the outlook for the economy, which struggles amid the end of a decade-long mining boom and slowing Chinese growth. Thus, the central bank did not rule out further interest rate cuts, following the recent reduction of the official cash rate to a new record low of 2.0%. Declining commodity prices and a stubbornly high Australian Dollar led to the economic forecast downgrades. The nation's economy is expected to grow just 2.5% in 2015, well below levels needed to lower unemployment, which now hoovers at decade highs. In February, the RBA predicted economic growth of 2.75% in 2015. In addition to that, the central bank revised lower its expectations for economic growth outlook to mid-2017. The economy is now estimated to grow by 3.25% in calendar 2016. Earlier it was predicted to expand by 3.5%. Also, the RBA said in its quarterly Statement on Monetary Policy, that the unemployment rate would continue to climb, peaking at 6.5% in mid-2016, up from 6.2% now.
The central bank's expectations for inflation were also nudged lower. In February, the RBA saw risks that inflation might exceed its 2%-3% inflation target band in the years out to mid-2017. Core and headline inflation is now expected to be consistent with that range.
© Dukascopy Bank SA