Australia’s central bank downgrades economic outlook, productivity speed limit

SYDNEY, Aug 12 (Reuters) – Australia’s central bank on Tuesday slashed its forecasts for economic growth as it downgraded the outlook for productivity, implying lower living standards and incomes for the country’s 27 million residents.

Yet the Reserve Bank of Australia also maintained its forecasts for a slowdown in core inflation and a steady outlook for unemployment, leaving the door open for a cut in interest rates.

Markets are wagering it will trim rates by a quarter-point to 3.6% on Tuesday, having stunned markets by holding steady in a rare split decision just last month.

In its quarterly Statement on Monetary Policy, the RBA cut its long-term assumption for productivity growth – generally output per hour worked – to 0.7%, from 1%, finally recognising a decade of sub-par outcomes