Central bank of Australia sees scope to cut interest rates.

On Thursday Australia's top central banker stated that he saw possibility to cut interest rates more to make sure a long-lasting economic influence and warned about declining business investment and consumer spending.

Thursday’s Government data sought to strike a chord to the investors about downside risks to the economy with exports falling 11% in April from March. Australian dollar fell down to $0.8014 from around $0.8040 beforehand.

As a result of a droop in exports, Australia suffered its first trade deficit since July last year, just a day after 1st quarter GDP showed the country moved away a recession, helped by its best trade performance in 48 years.

Reserve Bank of Australia Governor Glenn Stevens said that it is likely that activity has remained subdued in the June quarter, the quick downfall in business investment is more or less undoubtedly continuing. While consumer expenditure has held up quite well so far, it may be weaker over the next few months, as the one-off government payments pass and rising unemployment starts to weigh.

Stevens also said that the joint effect of the large fiscal and monetary incentive has played a role in mitigating Australia from the worst global downturn in decades and that monetary policy intended to cut borrowing costs and support demand but the central bank would be careful not to encourage shaky debts.