Reserve Bank Of Australia Expects Global Economic Slowdown

"THE Reserve Bank of Australia expects global economic growth to stall in the coming year, keeping the door open for more interest rate cuts in 2012.

The RBA cut the cash rate by 25 basis points - to 4.25 per cent - at its December board meeting, citing economic instability in the eurozone and moderating inflation for its decision.

It was the second cut in a row for the RBA, after it had left rates on hold for a whole year.

In its statement released today, the central bank said growing turbulence in the eurozone - and the flow-on effects on world markets - had been a dominating factor in the decision.

"It seemed highly likely that the sovereign credit and banking problems would weigh heavily on economic activity there (in Europe) over the period ahead, and there was a non-trivial possibility of a very sharp contraction," the RBA said in the minutes."

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