Newspaper article The Chronicle (Toowoomba, Australia)

RBA Vigilant on Prices; Central Bank Has Ammunition in Cannon

Newspaper article The Chronicle (Toowoomba, Australia)

RBA Vigilant on Prices; Central Bank Has Ammunition in Cannon

Article excerpt

THE head of Australia's central bank has given no indication there will be an interest rate cut as inflation worries linger.

Many market observers in recent weeks have been predicting an official interest rate cut before the end of 2011.

The money market has been pricing in a rate cut based on global growth worries, spiralling government debt in Europe and the weak non-mining sectors of the Australian economy.

However, Reserve Bank of Australia governor Glenn Stevens says rising prices are still a concern.

C[pounds sterling]Inflation bears careful watching, but we can keep it under control,C[yen] he told a House of Representatives Economics Committee hearing in Melbourne yesterday.

C[pounds sterling]At this point in time, our terms of trade are at a record high, while our unemployment rate remains low.C[yen]

Record prices for Australia's mineral wealth and a tight labour market fuelled by the mining sector is pushing up wages and inflation. …

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