Lower RBA forecasts 'in line with budget'

The Reserve Bank has lowered its economic forecasts, but the prime minister says they're in line with what the government has been predicting.

Treasurer Josh Frydenberg says despite the RBA revising forecasts, the Australian economy is strong. (AAP)

Prime Minister Scott Morrison does not believe his election chances will be hurt by the Reserve Bank dramatically revising down its economic forecasts.

Economists had expected the central bank to lower its forecasts in its latest Statement on Monetary Policy on Friday, but not as significantly as it did, prompting the Australian dollar to plunge.

The RBA is now expecting economic growth of 2.5 per cent in the 12 months to June this year, down from its previous forecast of 3.25 per cent.

It has similarly slashed its inflation forecast for the same period from 2.0 to 1.25 per cent.

The RBA cited slowing growth in other advanced economies, sluggish consumer spending and the ongoing property market correction.

The figures come as the federal government continues its efforts to gain favour with Australians - ahead of an election expected in May - by emphasising its economic achievements in its five years in power.

They include the coalition bringing the jobless rate to a seven-year low of five per cent and creeping closer to a budget surplus in mid-2020.

Asked whether he's worried the RBA's forecasts could hurt the government's ability to sell that message, Mr Morrison was unfazed.

"No, because they're now consistent with our budget forecast," he told reporters in Sydney.

Treasurer Josh Frydenberg said despite the revisions, RBA Governor Philip Lowe has made it clear the fundamentals of the Australian economy are strong.

"(It) is in a good, healthy, position and it is growing," he told reporters in Canberra.

But he stressed the government won't be taking anything for granted.

"We are going to deliver a budget surplus when we release the budget on April the 2nd, but we cannot be complacent about the Australian economy."

Shadow treasurer Chris Bowen said the figures show the coalition must focus more on improving wages growth and boosting business investment.

"This could have implications not just for the broader economy but for the upcoming federal budget," he said.

The central bank's Friday statement comes after it kept the cash rate at its record low of 1.5 per cent on Monday, as widely anticipated, meaning it has not shifted in 30 months.

Mr Lowe also revealed in an address this week that Australia's official interest rate could be cut again if income and spending growth are weaker-than-expected in the coming years.