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The Reserve Bank of Australia has nudged its long-term forecasts for GDP growth lower and predicted an uptick in long-term inflation in its latest Statement on Monetary Policy.
In the Australian central bank’s quarterly statement it lowered its medium-term GDP forecasts to between 2.75 and 3.75 per cent for the year ended December 2018. That range was 0.25 percentage points lower than the bank’s forecast in November, though it maintained its previous forecast of 2.5 to 3.5 per cent growth for the year ended June 2018.
In November the bank had downgraded its GDP forecast for the year ended June 2018 to between 2.5 per cent to 3.5 per cent from a previous forecast of between 3 per cent and 4 per cent.
In its new forecast for the year ended June 2019, the RBA predicted GDP growth would hold at 2.75 to 3.75 per cent.
In its latest statement the central bank also kept its inflation forecast at 1.5 to 2.5 per cent through the year ended December 2018, but forecast an uptick to a range of 2 to 3 per cent for the year ended June 2019.
The RBA held interest rates steady at its first policy meeting for 2017, as expected, and had struck a relatively upbeat tone about global economic conditions and a recovery for the domestic economy – while also voicing concerns over domestic labour conditions – in the minutes from its most recent policy meeting.
The lower long-term growth expectations hit alongside data showing home loan growth slowed in December as lending to investors fell for the first time since August. After a slight dip the Australian dollar was flat in morning trade at $0.7626.