RBA still sees growth upside at 3% a year
The Australian economy is chugging along as expected and remains on track to expand at around three per cent a year, the central bank says.
The Reserve Bank of Australia's quarterly Statement on Monetary Policy, released on Friday, contains a few positive adjustments to its earlier outlook.
"The economy is expected to grow at an annual rate of around three per cent over the next couple of years, which is a bit higher than estimates of potential growth," it said.
As a result, the jobless rate is expected to "edge lower" and underlying inflation to rise to around two per cent over the second half of 2017 and into 2018.
"The outlook continues to be supported by accommodative monetary policy and an improvement in the global economy," the RBA said.
Earlier this week, the central bank board left the RBA cash rate unchanged at 1.50 per cent, where it has sat for a year.
The RBA reinforced that decision on Friday, saying this was providing "appropriate support" for the economy.
The central bank also pointed to recent improvements in labour market conditions, in line with its expectation for a "gradual" recovery in wages growth.
"Wage growth is then expected to pick up gradually over 2018 and 2019," it said.
But it did note the likely upward pressure on inflation from higher power prices.
"There is considerable uncertainty about when and how the range of factors that contributed to the increases in wholesale utilities prices will be resolved and how large the direct effects on retail utilities prices will be," the RBA said.
THE RBA'S LATEST GROWTH FORECASTS (year end rates):
* December 2017 - 2pct to 3pct
*June 2018 - 2.5pct to 3.5pct
* December 2018 - 2.75pct to 3.75pct
*June 2019 and December 2019 - 3pct to 4pct
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