The Reserve Bank of Australia said the reduction in interest rates and the depreciation of the currency since 2013 are working to support economic growth.
“This is evident in a range of indicators, including employment growth, job vacancies, surveys of business conditions and trade data,” RBA said in its quarterly Statement on Monetary Policy on Friday.
The economy is expected to grow 2-3 percent in the year through June 2016 before picking up pace to 2.75-3.75 percent in the year through June 2017.
The outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand, the bank said.
Governor Glenn Stevens said yesterday that it seems likely that an accommodative stance will be appropriate for some time yet. He also noted that the macroeconomic effect of recent mortgage rate hikes may not be large.
Stevens will probably need to do more than just talk about rate cuts, Paul Dales at Capital Economics, said. So while the chances of further rate cuts this year appear to be fading, the economist still believes that rates will fall to 1.5 percent sometime next year.
The September quarter inflation outcome was lower than expected. Consumer price inflation is forecast to range between 1.5 and 2.5 percent in the year ended June 2016 and 2-3 percent in June 2017.
Underlying inflation is seen at around 2 percent over most of the next year before picking up to be around 2.5 percent, the bank said.
The forecast for unemployment rate was little changed from the previous Statement. The jobless rate is projected to remain within its range of 6-6.25 percent over the next year. Subsequently, the rate is expected to fall only gradually towards the end of the forecast period.
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