Australian economy 'is in a strong position'

The Australian economy is in a strong position and further cuts to interest rates will help to significantly boost the retail and housing sectors.

This is the view of HSBC chief economist Paul Bloxham, who told the Herald Sun that rate cuts, as well as the ongoing mining boom, have stood the country in good stead.

He feels that the Reserve Bank of Australia (RBA) will make further readjustments to interest rates next week and even if these are not passed on to the Aussie on the street by the major banks, the RBA will keep the cash rate on hold at 3.75 per cent.

HSBC also tipped manufacturing to make a recovery in 2012, although it also forecast unemployment to grow towards the end of the year.

"The problems in Europe haven't been fixed … but the RBA has the firepower to use monetary policy to support the weaker parts of the economy," Mr Bloxham told the news provider.

Yesterday (February 1st), the Courier-Mail reported that Commsec analysts had predicted that the RBA would be influenced by low grocery prices offered by the likes of Woolworths when recalculating inflation rates.

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