The Reserve Bank of Australia released its quarterly monetary policy statement today expecting gross domestic product to grow in a faster pace during this year. The bank expected more raises in the benchmark interest rates in 2010 alongside better economic conditions.
The RBA expected the economy to expand 2.5% in the year ending June 2010, while the GDP will grow 3.25% in the quarter ending December 2010 compared with earlier forecasts of 2.0%. The Australian economy expanded an annual 0.5% in the third quarter of last year and it grew 0.2% from the previous three months.
However, the CPI inflation reached 2.1% in December 2009, and the bank expected inflation to ease this year to an annual 2.5% from 3.25%. Inflation shall accelerate to 2.75% in 2011, the bank added keeping in mind that the central bank's target is keeping inflation between 2% and 3%.
The central bank signaled raising interest rates this year alongside better economic conditions. The RBA said interest rates will be raised to 4.5% by the end of 2010, keeping in mind that monetary policy makers kept borrowing costs unchanged this month as the effect of earlier changes still limited.
The reserve bank raised the nation's benchmark by 75 basis points in three straight meetings in October, November and December to 3.75%, after interest rates were kept at 3.00% for six months to stimulate and support economic recovery from the worst recession since World War II. Yet, the RBA said today interest rates are no longer at an exceptionally low level.
Moreover, policy makers are anticipating investments in the mining sector to increase further from its high levels, while exports of resources will "grow strongly". Demand from China, Australia's main trade partner, continued to support the exports sector and helped to narrow the trade deficit. China's manufacturing sector continues to rebound which is adding to signs of optimism for Australian exporters.
As for the labor market, the RBA said unemployment rate peaked at 5.75% which is much better than expectations. The jobless rate declined to 5.5% in December and employers added 135,700 jobs between September and December that biggest four months hiring in about three years, indicating more demand for workers.
Recovering employment and increasing house prices in the fourth quarter of last year helped consumer confidence to reach a six month high in January. Today's statement said households are taking a cautious approach to their spending more than the case in a few ears ago, keeping in mind that a report yesterday showed retail sales dropped 0.7% in December as the effect of the government's stimulus measures faded.
The RBA expected the economy to expand 2.5% in the year ending June 2010, while the GDP will grow 3.25% in the quarter ending December 2010 compared with earlier forecasts of 2.0%. The Australian economy expanded an annual 0.5% in the third quarter of last year and it grew 0.2% from the previous three months.
However, the CPI inflation reached 2.1% in December 2009, and the bank expected inflation to ease this year to an annual 2.5% from 3.25%. Inflation shall accelerate to 2.75% in 2011, the bank added keeping in mind that the central bank's target is keeping inflation between 2% and 3%.
The central bank signaled raising interest rates this year alongside better economic conditions. The RBA said interest rates will be raised to 4.5% by the end of 2010, keeping in mind that monetary policy makers kept borrowing costs unchanged this month as the effect of earlier changes still limited.
The reserve bank raised the nation's benchmark by 75 basis points in three straight meetings in October, November and December to 3.75%, after interest rates were kept at 3.00% for six months to stimulate and support economic recovery from the worst recession since World War II. Yet, the RBA said today interest rates are no longer at an exceptionally low level.
Moreover, policy makers are anticipating investments in the mining sector to increase further from its high levels, while exports of resources will "grow strongly". Demand from China, Australia's main trade partner, continued to support the exports sector and helped to narrow the trade deficit. China's manufacturing sector continues to rebound which is adding to signs of optimism for Australian exporters.
As for the labor market, the RBA said unemployment rate peaked at 5.75% which is much better than expectations. The jobless rate declined to 5.5% in December and employers added 135,700 jobs between September and December that biggest four months hiring in about three years, indicating more demand for workers.
Recovering employment and increasing house prices in the fourth quarter of last year helped consumer confidence to reach a six month high in January. Today's statement said households are taking a cautious approach to their spending more than the case in a few ears ago, keeping in mind that a report yesterday showed retail sales dropped 0.7% in December as the effect of the government's stimulus measures faded.
