Australia's RBA Cuts Economic Growth Forecasts

Australia's central bank on Monday lowered its forecasts for economic growth for the next two years, saying it would be reviewing interest rates in the months ahead with the aim of avoiding an even sharper slowdown in domestic demand.
In its quarterly monetary-policy statement, the Reserve Bank of Australia (RBA) said the intensification of the global financial crisis meant the outlook for world growth was significantly weaker than previously assumed. Its new forecasts were even lower than the government's revised forecasts announced last week.
Falling share prices had also cut into household wealth at home, while a slump in commodity prices would hurt earnings from Australia's resource exports, the bank said.
As a result, the central bank had decided that a significantly more rapid easing in monetary policy was needed and it slashed the key cash rate by 200 basis points between September and November, taking it to a three-year low of 5.25 percent.

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