RBA says outlook for demand, output weaker than expected

(MarketWatch) -- The policy board for the Reserve Bank of Australia found earlier this month that the near-term outlook for demand and output in the nation was "weaker than earlier expected," according to minutes of the board's April 7 meeting released Tuesday.

"A period of low capacity utilization and a weaker labor market was seen as increasing the likelihood of a decline in inflation over the medium term," a summary of the board meeting said. "As such, members saw scope for a modest reduction in the cash rate."

At the meeting, Australia's central bank cut interest rates by a quarter-point and said mortgage rates were at historically low levels, marking its clearest signal yet that the interest-rate cycle has bottomed. It cut the cash rate to 3%, a 49-year low. See full story on RBA's April 7 rate cut.
Even so, the board's summary said that a "recovery in demand was likely towards the end of the year."

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