Australian growth set to remain stuck in the slow lane

Sam Ferraro

The RBA Board chose to leave rates unchanged at 2% at its February meeting but maintained its easing bias, reiterating that the inflation outlook provides scope for easier policy to support demand if necessary. The central bank appears to be content for growth in the Australian economy to remain stuck in the slow lane over the course of 2016 and is hoping that the non-mining sectors grow enough to ameliorate the effects of the slump in mining business investment. Evidente remains of the view that at least one more rate cut (and most likely two) is necessary to revive animal spirits in the corporate sector and boost household consumption. International developments might well force the hand of the reluctant rate cutter, notably more monetary stimulus from central banks in the face of further deterioration in the global growth environment. (VIEW LINK)


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