The Reserve Bank of Australia has cut its 2011 economic growth forecast and then increased their outlook for inflation, marking a probability that they may push for an extension of the interest rate pause for the second year due to the anxiety over a stalling economy.
According to the central bank, “In Australia, conditions are expected to remain very strong in the mining industry, as well as those parts of the economy benefiting from high rates of resource-sector investment. In other sectors, the high exchange rate and subdued levels of retail spending mean that the trading environment is likely to remain difficult.”
The report does not seem to show that the RBA Governor Glenn Stevens has a problem: faster inflation and export led growth that faces the threat of global slowdown. The Australian dollar is on its way to its biggest weekly decline since May 2010 and over $4.4 trillion has been wiped out from the equity market values all over the world due to anxiety that the United States may experience another recession.
The RBA forecast growth this year is at 2% which is lower than the May 6 estimate of 3.25%. in the year 2012, the gross domestic product is expected to move up by 4.5%, a figure stronger than the previous estimate of a 4.25% expansion. The RBA said that their estimates assume that the cash rate remains unchanged during that period, “compared with the technical assumption in May of a 50 basis points rise by mid 2013.”
Tags: equity market, resource sector, growth outlook, trading environment, Gross domestic product
Equity Market Sell-Off Has Nothing to Do With Credit Downgrade: The worst possible thing that could happen to th...
Just a slip up admitting that the central bankers expect full cooperation and obedience of all the World's governments and people because nobody knows how to manage the world like them and we would all shrivel up and die without them.