(9 February 2010 – Australia) The Reserve Bank of Australia has increased its forecast for growth and inflation in its latest statement on monetary policy, indicating that it expects to raise rates a further three times in 2010.The statement, released to follow up the post-rate comments by governor Glenn Stevens, suggested that unemployment has already hit its high point and was on the way back down.
The cash rate is expected, by the market, to reach around 4.5 per cent by the end of the year, the statement said.
The Reserve Bank added that this technical assumption for the cash rate should in no way be viewed as a commitment by the board to any particular path for policy.
In year-average terms, gross domestic product is forecast to grow by 2 percent in 2009-10 and 3.5 percent in 2010-11 and 2011-12. The forecasts are based on the technical assumption of a rise in the cash rate over the forecast period, with the assumed path broadly consistent with market expectations as the statement was finalised, the RBA’s statement highlighted.