- Reserve Bank of Australia
The Reserve Bank of Australia downgraded its growth and inflation outlook on a steeper decline of mining investment and reiterated its pledge to keep interest rates unchanged. Following the release of Monetary Policy Statement, the Australian Dollar weakened versus the U.S Dollar namesake to trade at $0.9248 compared with $0.9267 ahead of the statement. While the Australian dollar has eased from a peak last year, the RBA said the exchange rate remains elevated, particularly given the recent falls in commodity prices. A month ago, RBA Governor Glenn Stevens tried to talk the nation's currency down during his speech in Hobart, but the Aussie's status as a safe-haven currency and the yield spread over other developed market assets has kept it in a band between $0.93 and $0.95 since early June.
After a upbeat start to the year, economic growth has declined to a more moderate pace as exports declined, while retail sales and consumer confidence weakened. The RBA expects growth will be a little below its long-term trend of around 2% to 3% in the year through June 2015, down from a range of 2.25%- 3.25% forecast three months earlier. On core inflation, the RBA lowered its forecast to 1.75% to 2.75% from 2.25% to 3.25% in May, the statement indicated. Australia is losing its developed-world-beating status as the mining investment boom that powered it through the global financial crisis wanes.
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