GDP joy rings hollow for the RBA

A solid GDP result won't be enough for the Reserve Bank to alter the cash rate, with slumping business investment and fiscal austerity signalling further economic challenges ahead.

Growth was stronger than the market expected in the December quarter but the economic outlook is still fraught with challenges. The Reserve Bank of Australia will be reluctant to make a commitment on interest rates until it has a better grasp of the mining investment collapse and the Coalition’s budget intentions.

Real Gross Domestic Product rose by 0.8 per cent in the December quarter, beating market expectations to be 2.8 per cent higher over the year. Annual growth remains below trend but has picked up over the past three quarters.

Graph for GDP joy rings hollow for the RBA



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