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Australian PM says falling inflation best possible news for interest rates

Australian PM says falling inflation best possible news for interest rates

A recent fall in inflation was the best possible news ahead of Australia's central bank meeting next week to consider whether to change interest rates, Prime Minister John Howard said Monday.
The Reserve Bank of Australia will hold its first monthly board meeting for the year on Tuesday next week when it will decide whether it will leave the official cash rate at 6.25 percent.
The bank last lifted the benchmark rate by a quarter of a percentage point in November, and also in August.
But upward pressure on interest rates was eased last week when government figures revealed that inflation for the final quarter of 2006 had fallen for the first time since the start of 1999.
Howard said he could not predict whether the central bank would lift interest rates in 2007 _ an election year in which climbing mortgage payments is looming as a major campaign issue.
"The inflation figure last week was good news but whether ultimately it means there will be no interest rate rise this year, it's too early to say," Howard told Southern Cross Broadcasting radio in Sydney.
"It's the best possible start to a year in relation to interest rates," he added.
In the December quarter of 2006, the consumer price index fell 0.1 percent compared with the third quarter, the Australian Bureau of Statistics said, thanks largely to falling world oil prices.
Annual inflation slowed to 3.3 percent in the fourth quarter, its lowest level since the first quarter of 2006, and down from 3.9 percent in the third quarter.
The central bank manipulates interest rates to keep inflation within a target range of 2 and 3 percent.
Howard said the message to the bank from the latest figures was that inflation was headed down.
"It is a very good start to the year to say inflation is going down and we have a 30-year low in unemployment," he said.
Howard usually refuses to publicly speculate about what decisions the independent bank will make on interest rates.


Updated : 2021-02-27 12:42 GMT+08:00