Australia's central bank cut its economic growth forecasts and kept interest rates at a record low Tuesday, as house prices in major cities slumped and consumer spending weakened.
"Some downside risks have increased," governor Philip Lowe said after the Reserve Bank of Australia's first board meeting of the year. The central bank predicted the economy would expand 3.0 percent in 2019, much slower than its previous forecast of 3.5 percent. Borrowing costs were held at 1.50 percent, where they have been since August 2016.
"The main domestic uncertainty remains around the outlook for household spending and the effect of falling housing prices in some cities," said Lowe.
House prices, particularly in Sydney and Melbourne, continued to fall in January and the pace had sped up over the past three months, leading property data provider CoreLogic said last week.
Other economic indicators have also taken a negative turn, with new retail sales figures on Tuesday falling 0.4 percent in December, below market expectations.
Lowe said inflation - at 1.8 percent in December and below the bank's target range of 2.0-3.0 percent - would pick up gradually but would "take a little longer than earlier expected".
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