Australia's central bank stuck to its upbeat view of the economy after it h...
SYDNEY - Australia’s central bank stuck to its upbeat view of the economy after it held rates at record lows in a widely expected move on Tuesday, just a day before GDP data is likely to show domestic momentum almost stalled last quarter.
That wait may prove longer with a run of soft data from consumption to housing this week leading analysts to downgrade forecasts for fourth-quarter growth to near nothing. Official figures on gross domestic product are due on Wednesday. Analysts polled by Reuters suspect the economy expanded by a sub-par 0.3 percent in the December quarter, after a disappointing 0.3 percent rise in the third quarter.
RBA Governor Philip Lowe acknowledged Australia’s A$1.8 trillion economy may have slowed over the second half of 2018. Still, he held out the hope for growth to pick up to around 3 percent this year led by rising business investment, higher government spending and stimulatory monetary policy.“The stronger labor market has led to some pick-up in wages growth, which is a welcome development,” Lowe said in a brief statement accompanying the bank’s rate decision.
So far, Lowe has played down the damage done by the fall in home values, noting that it comes after a decade of booming prices. The housing market will be the topic of his speech on Wednesday.The RBA’s overall optimism isn’t shared by many economists who expect a slowdown in domestic activity this year would push the central bank to further ease policy.
“We think rate cuts this year, while not guaranteed, are now more likely than not,” said Nomura economist Andrew Ticehurst.
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