- Economists polled by Reuters had expected an expansion of 2.4% compared to 2.7% in the fourth quarter of 2022.
- On a quarterly basis, gross domestic product grew 0.2 percent, compared to the 0.3 percent expected in a Reuters poll.
A view of the Yarra River flowing through the city center of Melbourne, Australia.
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Australia’s first-quarter GDP expanded 2.3% year-on-year, just short of analysts’ expectations.
Economists polled by Reuters had expected an expansion of 2.4%, compared to an expansion of 2.7% in the fourth quarter of 2022. On a quarterly basis, gross domestic product grew by 0.2%, compared to the 0.3% expected in a Reuters poll. .
Kathryn Keenan, Head of National Accounts Division Australian Bureau of StatisticsHe said: “This is the sixth consecutive rise in quarterly GDP, but the slowest growth since the Covid-19 delta shutdown in the September 2021 quarter.”
“Private and public gross fixed capital formation were the main drivers of GDP growth this quarter,” Keenan said.
GDP readings are central to the RBA’s decision-making process for its monetary policy. Just on Tuesday, the Reserve Bank of Australia surprised the markets and raised its benchmark interest rate by 25 basis points to 4.1%, the highest level in 11 years.
Early Wednesday morning, Reserve Bank of Australia Governor Philip Lowe delivered a speech at the Morgan Stanley Australia Summit, reiterating his position that the central bank will seek a “narrow course”.
In this “narrow path” that Lowe envisions, inflation in Australia returns to the target range of 2% to 3%, the economy continues to grow, and gains in the labor market are sustained.
“It is still possible to go down this road and our ambition is to do so. But it is a narrow road and is likely to be a bumpy road with risks on both sides,” Lowe said.
Lowe explained that the intention to maintain an improvement in the labor market “does not mean that [RBA] It will bear continued high inflation.”
As such, the decision to raise rates again on Tuesday was taken “to provide greater confidence that inflation will return to target within a reasonable time frame,” he said.
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