RBA cuts growth forecast by 1%
Concerns that the Australian economy could be faltering – which could have a huge impact on house prices and home loan availability – have been compounded by the Reserve Bank of Australia's (RBA) decision to downgrade its growth forecast.
The RBA slashed its GDP prediction by an entire percentage point – from 4.25 to 3.25 per cent – and claimed that global economic turmoil meant that forecasting remained difficult.
However, the RBA claimed that the reduction does not alter the country's strong economic position.
If Australia's economy remains positive, the RBA expects consumers to abandon their current saving habits and spend more as confidence returns.
"The change in household behaviour is also evident in borrowing decisions, with recent growth in housing and credit card debt the slowest for many years," the institution claimed.
Recently, the Australian Bureau of Statistics showed that consumers were still reluctant to part with their cash and, as a result, were using their debit cards far less.
Get more information on the latest Reserve Bank interest rates with Mozo.