The Reserve Bank of Australia said the nation’s economy is set to remain subdued and warned Japan’s monetary policy could spur flows that support the local dollar. “Gross domestic product growth is still expected to be below trend until mid-2015,” the RBA said in its quarterly monetary policy statement in Sydney Friday, leaving its growth forecasts largely unchanged, Bloomberg said. Capital flows from investors seeking higher yields “could hold the Australian dollar at a higher level than real economic fundamentals would imply,” it said. Policy makers are fretting over a disconnect between the currency and falling commodity prices, led by a more than 40% drop in iron ore.
