RBA lifts inflation forecast
Tuesday, 14 August 2007
SYDNEY, Aug 13 (AFP): Australia's central bank today lifted its forecast for underlying annual inflation from 2.5 to 3.0 per cent, the top of its target range, indicating interest rates could rise further.
The Reserve Bank of Australia (RBA) said strong price data, which last week prompted the bank to raise its official cash rate from 6.25 to 6.50 per cent, contributed to the higher forecast for this year.
The bank said that despite the effect of the latest rate rise and the appreciation of the Australian dollar, underlying inflation was forecast to be around 3.0 per cent over the year to December 2007.
Ongoing pressures were also forecast to keep underlying and consumer price index (CPI) inflation near the top of the target range in 2008, it added.
"Weighing up all these considerations, the board judged that a somewhat more restrictive monetary policy setting was required in order to contain inflation in the medium term," it said in a quarterly monetary statement.
The bank said the growth of the Australian economy, which appears to have strengthened since the middle of last year, continued to be driven by domestic demand with consumer spending picking up.
The Reserve Bank of Australia (RBA) said strong price data, which last week prompted the bank to raise its official cash rate from 6.25 to 6.50 per cent, contributed to the higher forecast for this year.
The bank said that despite the effect of the latest rate rise and the appreciation of the Australian dollar, underlying inflation was forecast to be around 3.0 per cent over the year to December 2007.
Ongoing pressures were also forecast to keep underlying and consumer price index (CPI) inflation near the top of the target range in 2008, it added.
"Weighing up all these considerations, the board judged that a somewhat more restrictive monetary policy setting was required in order to contain inflation in the medium term," it said in a quarterly monetary statement.
The bank said the growth of the Australian economy, which appears to have strengthened since the middle of last year, continued to be driven by domestic demand with consumer spending picking up.