RBA reduces GDP, inflation forecasts for 2015

Sydney

AUSTRALIA's central bank lowered its 2015 growth and inflation forecasts and predicted unemployment will rise, underscoring this week's decision to cut interest rates. "Growth overall is now forecast to remain at a below-trend pace somewhat longer than had earlier been expected," the Reserve Bank of Australia (RBA) said on Friday in its quarterly monetary policy statement in Sydney. "The economy is expected to be operating with a degree of spare capacity for some time yet, and domestic cost pressures are likely to remain subdued."

The RBA reduced its forecast average expansion for this year to between 1.75 per cent and 2.75 per cent from between 2 per cent and 3 per cent estimated in November. It lowered projected headline consumer-price growth to 1.25 per cent in the year through June from between 1.5 per cent and 2.5 per cent seen three months earlier.