(RTTNews) - The Reserve Bank of Australia Friday slashed its growth outlook for the coming year and signaled its belief that the nation’s inflation rate is likely to remain low.

The RBA’s Monetary Policy Statement forecast year-on-year growth of 0.25 percent for 2008-09. The Australian economy grew about 1.9 percent on year in Q3 of 2008.

The Bank lowered its GDP Growth Forecast for the second quarter of 2009 from the original estimate of 1.5 percent.

The forecast for Q2 non-farm GDP growth declined to 0 percent from 1.0 percent. The central bank forecast, however that non-farm growth would recover by mid 2010 to post an expansion of 1.25 percent.

The Bank also said the nation’s economic stimulus plans are expected to cushion the blow of the global economic downturn.

Regarding inflation, the RBA revised its inflation, now forecasting full year CIP will return to the bank’s 2 percent to 3 percent range by mid 2009. The bank earlier projected the rate would not return within the range until mid 2011.

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