2019.08.0903:51:00UTC+00RBA Chief Sees 'Gentle Turning Point' In Economy

Australia's economy may have reached a "gentle turning point" underpinned by lower interest rates, tax cuts, weaker currency, a bright outlook for investment in the resource sector, and housing market stabilization, Reserve Bank of Australia Governor Philip Lowe said.

The quarterly growth outcomes is likely to strengthen gradually after a run of disappointing numbers, Lowe said in his opening statement to a parliamentary panel in Canberra on Friday.

In the Statement on Monetary Policy, the central bank downgraded its growth outlook. The economy is forecast to expand 2.5 percent instead of 2.75 percent.

The downward revision this year mainly reflects weak consumption growth, Lowe said. The consumption outlook remains the main source of forecast uncertainty, he noted.

The economic growth is seen at 2.75 percent next year and around 3 percent over 2021.

The unemployment rate is expected to remain around 5.25 percent for some time, before gradually declining to around 5 percent as GDP growth picks up.

The bank forecast underlying inflation to pick up to a little above 2 percent over 2021.

RBA had resorted to back-to-back rate cuts in June and July, taking the key rate to a record low 1.00 percent.

Lowe said it is difficult to escape the fact that if global interest rates are low, they are going to be low here in Australia too.

"Our floating exchange rate gives us the ability to set our own interest rates from a cyclical perspective, but it does not insulate us from long-lasting shifts in global interest rates driven by saving/investment decisions around the world," the RBA Governor said. Further, he said the possibility of lower interest rates remain on the table. The board is prepared to ease policy further if needed.