RBA forecasts tough months ahead

The deputy governor of the Reserve Bank of Australia (RBA) Ric Battelino has said the financial institution faces some difficult decisions regarding interest rates in the coming months.

He asserted that policies are likely to be heavily influenced by the events unfolding in the global financial and economic markets as well as the domestic situation.

The expert told a conference in Sydney hosted by the Economist magazine that turmoil in the world's financial markets contribute to the uncertainty regarding Australia's economic outlook.

"It does not look like the challenge will become any easier over the months ahead," he stated.

Mr Battelino added that there is currently little information for the RBA to use to make judgements about the impact of the global problems on the country.

His comments come after Merrill Lynch strategist Tim Rocks told the Australian that the RBA is likely to reduce interest rates by November this year or even sooner.

At the moment the cash rate is set at 4.75 per cent and it has been at this level since November 2010.

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