- Katrina Ell, an economist at Moody's Analytics
The Reserve Bank of Australia reiterated its view that interest-rate reductions this year and the Aussie Dollar's depreciation are supporting growth, suggesting rates are likely to remain on hold. Nevertheless, the central bank said that recent inflation data provided room to ease monetary policy further if needed. Traders are pricing in a 25% chance of a rate reduction at the December meeting, climbing to an almost 60% in February.
In its quarterly policy outlook, the RBA predicted that underlying inflation would remain at the floor of the 2%-3% target range for most of next year. The Australian economy is predicted to grow by 2% to 3% in the year through June 2016, accelerating to 2.75% to 3.75% in the year through June 2017. In the 12 months through December 2017 economic output is seen increasing by 3% to 4%. The central bank's statement was also upbeat about Australian labour market, saying employment growth is predicted to "remain relatively strong", while the participation rate will rise further. The jobless rate is forecast to stay within its recent range of 6% to 6.25% over the next year and decrease gradually toward the end of the forecast period.
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