In a quarterly report, the Australian central bank improved its GDP outlook for this year more than previously expected, especially during the second half of the year since the first few months of this year will grow slower because of the recent floods. But from June quarter as coal production picks up and the rebuilding effort gets under way the economy will start growing faster.
As china is increasing demand on commodities while the strong Australian dollar lowers import prices, the RBA raised its forecast for 2011 growth to 4.25%, from November's prediction of 3.75%. The CPI will rise 3%, from a previous estimate of 2.75%. This report increased bets that the central bank, which kept rates unchanged at 4.75% for the past two meetings, might resume increasing borrowing costs by May.