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To: Joan Osland Graffius who wrote (14216)	4/1/2002 12:05:37 PM
From: Edmond Katonica	Read Replies (1) \| Respond to of 78745

Joan Rate rise in Aussie Land ? RBA tipped to delay rate rise Financial markets will start the trading week on tenterhooks with the Reserve Bank of Australia board meeting on Tuesday amid expectations that interest rates will soon rise. Australia's cash rate stands at 4.25 per cent and the RBA last altered interest rates in December 2001 when it cut the cash rate by 25 basis points. However, most economists believe the RBA will not increase interest rates on Wednesday after its board meeting the day before and will instead prefer to wait another four weeks until the May meeting by which time further economic data will be at hand. Credit Suisse First Boston chief economist Peter Horn said he expected the RBA would want to wait. "Let's wait until May although you can't rule out the fact they may have changed their view on the balance of risks to growth and inflation ... I'd want to see at least another month's worth of data and the CPI," he said. The Consumer Price Index inflation data is published on April 24. Standard & Poor's MMS director of economic research Stephen Kirchner said the RBA would commence a new tightening cycle following its April or May meetings. "The choice the RBA makes between the two will tell us something about the RBA's thinking on the world economy and its willingness to front-run inflation outcomes," he said. Dr Kirchner said a rate hike on Wednesday would suggest a dramatic turnaround in the central bank's view of the world economy. He said an April tightening would support those who believe the RBA should pre-empt any surge in the Consumer Price Index (CPI). A change in interest rates in May, however, "would allow the RBA to commence a tightening cycle with somewhat less flak from the usual suspects in the business and political communities". RBC Capital Markets senior economist Monica Fan said despite the perception the RBA would be pre-emptive by raising rates now, the lack of urgency meant the bank could wait and examine another month of economic data. Nomura Australia senior economist Tom Kenny said he would not be surprised by a hike on Wednesday but it was more likely in May. "You could make an argument either way," he said. However, he did not think the CPI would necessarily be the catalyst for May's move. He said the RBA was probably more interested in housing, employment and the prospect that the downside risks to the economy from the United States seem to be fading. Mark Rider, chief economist at UBS Warburg, said he did not think the RBA would move this week. "I think they normally tend to - not necessarily their first (tightening cycle) move - but most moves tend to be following inflation data so the usual procedure would be to wait for that," he said. ---------------- Copyright © 2002 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service - Disclaimer Partner copyright: Brought to you by AAP, Copyright © All Rights Reserved. Questions or suggestions? Send us feedback. Opinions? Take it to chat.