The Reserve Bank has moved on recent reports of a decline in mining profits, cutting its forecast as downturn ripples through industries.

The Reserve bank of Australia’s latest statement on monetary policy and the national economic outlook has predicted modest growth of just 2.25 per cent in the coming year. The outlook has soured from last time the RBA commented, cutting 2.5 per cent from the previously forecast figure.

Australia’s central bank left its outlook on inflation steady at about two per cent, with word the decline of the resources investment boom is now being felt in the broader economy.

The RBA’s latest statement says: “Mining investment is likely to decline noticeably over the next few years... while commodity prices overall remain at historically high levels, the prices of those commodities for which there has been significant investment in capacity in Australia and globally are projected to decline gradually over the coming years. Accordingly, the terms of trade are expected to decline over the medium term.”

The flow-on effects which reach from mining companies down through the supporting industries, with a projected drop in employment rates too.

“Employment growth is expected to be only modest over the next few quarters, consistent with the below-trend growth of the economy,” the RBA report says, “this will see the unemployment rate increase gradually for a year or so. Subsequently, as growth moves closer to trend and eventually above trend, employment growth should pick up, and the unemployment rate should level out and then start to decline.”

There has been speculation in the financial sector that the report may pave the way for an upcoming cut to interest rates, but there has been no official word from any source yet.