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Australian central bank projects accelerated economic growth

The Reserve Bank of Australia expects the economy to grow at an annual rate of around 3% over the next couple of years, higher than prior estimates, saying the unemployment rate should edge lower.

The central bank said its improved economic outlook is underpinned by an accommodative monetary policy and improved global economy. The central bank maintained its cash rate Aug. 1, saying Aug. 4 that the record low 1.5% rate is in line with sustainable economic growth and achieving the medium-term inflation target.

The central bank revised upward its forecast for headline inflation to be between 2% and 3% over much of the forecast period that runs until 2019. The regulator expects the unemployment rate to be "a little under" 5.5% by 2019-end, compared to 5.6% now, as some spare capacity in the labor market is projected to remain.

Wage growth is likely to remain subdued but increase gradually over the forecast period as labor market conditions continue to improve, the central bank said.

Meanwhile, Australian retail turnover rose 0.3% in June on a seasonally adjusted basis, according to the Australian Bureau of Statistics, following a rise of 0.6% in May. In seasonally adjusted volume terms, turnover rose 1.5% in the quarter that ended in June, following a rise of 0.2% in the first quarter.