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Australian dollar faces further rate cuts

The Australian dollar is trading lower today after a speech today by RBA governor Glen Stevens where he left the door open for further interest rate cuts if needed to kick start the economy.

At 4.41pm (AEDT) the Aussie dollar was trading at US78.95c down from US79.04c in yesterdays close.

In his speech Governor Stevens noted that time was needed to access the economy with the central bank prepared to act if certain targets are not met

“The board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the inflation target over time,” he said.

The RBA also noted that they expect economic growth to be between 2.5 and 3.5 per cent over the next 12 months, which is a quarter of a percentage point weaker than previously predicted.

"GDP growth is forecast to remain below trend for a bit longer than had been anticipated in the February statement," the RBA said.

One of the main concerns for the RBA is the Chinese economy with signs of cracks appearing in the world’s 2nd largest economy,

“In China, economic growth in 2015 is projected to be a little weaker than previously forecast, reflecting slower-than-expected growth across a range of activity indicators in the March quarter,” the RBA said.



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