Australian Economy Grows 2.5% in 2014

Australia’s economy continued to show sluggish growth in the fourth quarter, adding to the case for further stimulus in the coming months.  The economy expanded 2.5 percent in the fourth quarter from the year-ago period, government data showed on Wednesday, in line with expectations and after growing 2.7 percent in the third quarter.

Quarter on quarter, the economy logged growth of 0.5 percent, also matching estimates and following the 0.3 percent expansion in the third quarter.  Markets showed little reaction on the news: the benchmark S&P ASX 200 index was down 0.3 percent, no change from before the data release, while the Australian dollar rose briefly to $0.7829 before falling back.

The figures came a day after the Reserve Bank of Australia (RBA) decided to refrain from further monetary stimulus, after it cut rates by 25 basis points last month to a historic low of 2.25 percent.  “The bias is certainly to further easing, with the economy growing below-trend and unemployment rates rising, and that gives them plenty of ammunition to cut rates once more by May, taking cash rates to 2 percent,” said Matthew Circosta, economist at Moody’s Analytics.

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