Ris­ing dol­lar could buck growth

Townsville Bulletin - - NEWS -

THE cen­tral bank has warned a soar­ing Aussie dol­lar could slow the pace of eco­nomic growth.

Re­serve Bank of Aus­tralia Gover­nor Philip Lowe said yes­ter­day the board had de­cided to leave the of­fi­cial cash rate at 1.5 per cent, where it has now re­mained for 12 months.

He said the econ­omy was ex­pected to grow at an an­nual rate of 3 per cent for the next few years but stressed that may change should the Aus­tralian dol­lar con­tinue to rise.

“The higher ex­change rate is ex­pected to con­trib­ute to sub­dued price pres­sures in the econ­omy,” Dr Lowe said.

“It is also weigh­ing on the out­look for out­put and em­ploy­ment. An ap­pre­ci­at­ing ex­change rate would be ex­pected to re­sult in a slower pick- up in eco­nomic ac­tiv­ity and in­fla­tion than cur­rently fore­cast.”

Dr Lowe also said con­sump­tion re­mains a source of un­cer­tainty for the econ­omy.

“Re­tail sales have picked up re­cently, but slow growth in real wages and high lev­els of house­hold debt are likely to con­strain growth in spend­ing,” he said.

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