RBA lowers inflation forecast as the European crisis worsens

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) November 4, 2011 -- Reserve Bank of Australia (RBA) has stated today, it is open to another interest rate reduction established as Europe's debt crisis continued volatility.

In the RBA's recent statement on monetary policy released today, it has to be the expected slower economic growth, reduce inflation and rising unemployment or a little, then falls. RBA warned that the greatest risk was in its forecasts, the national debt and banking problems in Europe.

"The Bank's central scenario remains in which the European authorities is not enough to avert a disaster, but unable to periodic bouts of high uncertainty and volatility to avoid," said the RBA.

"A worse outcome in Europe would damage the Australian economy, and core inflation will likely fall."

The RBA cut rates by 25 basis points to 4.5% this week, citing the ongoing insecurity in Europe and declining inflationary pressures on the spot.

AMP Capital Investors chief economist Shane Oliver said inflation was in the foreground.

"On an underlying basis, it will be comfortable in the target range for the forecast period out to December 2013," Curtis told AAP.

"To reduce a large part of this statement in accordance with what they have just done is the interest."

Oliver said the statement suggested that if the change was the RBA's cash rate, it would be another cut.

"This statement is more than the pigeons exhibited three months, the reality of global risks and uncertainties about the global and domestic conditions also mixed readings in the last time," he said.

"We have also seen downgrades to economic growth forecasts. I think they are all based on a multi-keeping pigeons from the Reserve Bank."

Oliver said the RBA would take a wait-and-see approach to further rate cuts.

The revised inflation forecast certainly offers more room for further rate cuts when the Reserve Bank estimates that are necessary to provide a boost for growth. There is nothing that suggests a sense of urgency. There is a good opportunity to set the Reserve Bank PAT meeting in December.

RBA sharply cut in the medium term forecasts for inflation and economic growth in its statement. He expects core inflation to remain within its 2% to 3% target band until the end of 2013 while the economy was close to average growth rates over the same period.

The core CPI is now expected to grow by only 2.5% in the middle of 2012. At the end of 2013 there will be between 2.5% and 3% are tracking. The bank had expected to continue over the target range for inflation.

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