RBA Sees Below-Trend Growth in 2014, Keeps Rate-Cut Scope
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The Reserve Bank of Australia forecast below-trend growth and rising unemployment in 2014 as resource investment drops and renewed currency strength drags on the economy, leaving open the chance of lower interest rates.
The forecast “reflects the substantial fall in mining investment, planned fiscal restraint and the still high level of the Australian dollar,” the RBA said in its quarterly monetary policy statement in Sydney today. At the past three meetings the board judged “it was appropriate to hold the cash rate steady, but not to close off the possibility of reducing it further, should that be needed to support economic activity,” it said.