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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Hawkmoon who wrote (9370)	5/8/2008 11:06:05 PM
From: John Pitera	Respond to of 33421

ROTF..... expect two oil men to try to reduce oil price speculation..... check out this headline...as Austin Powers famously said in AP III. when confronted with the 4 dining options, none of which he likes and is then told by GoldMember....... "vell then Mr. Powers, it seems there is no pleasing you"..... Austin looks at his dad quizically and then says "thats not right" ...... Australian Central Bank Raises Inflation Forecast and Cuts Growth..... higher inflation and lower growth...... "That's not right" ...... that's not cricket... John --------------------------------- Australian Central Bank Raises Inflation Forecast (Update1) By Jacob Greber May 9 (Bloomberg) -- Australia's central bank raised its forecasts for inflation this year and in 2009 after surging food, gasoline and housing costs drove up consumer prices more than expected in the first quarter. The bank also trimmed its outlook for economic growth amid ``evidence that demand has slowed, but it will take time for this to have a substantial impact on inflation.'' The Reserve Bank of Australia said in its quarterly policy statement in Sydney today that inflation won't return to its target band until 2010. Consumer price gains will peak at 4.5 percent late this year, higher than the 3.5 percent forecast in February, the bank said today. Governor Glenn Stevens left the benchmark interest rate at a 12-year high of 7.25 percent this week after raising borrowing costs in March for the fourth time in seven months. The bank's board ``judged that the setting of monetary policy was appropriate for the time being,'' at its meeting on May 5, today's report said. ``It is possible that the recent weakness in consumer sentiment and domestic spending will prove to be mostly temporary, especially in light of the large boost to national income'' from the export boom, the bank said. The nation's currency fell to 94.38 U.S. cents at 11:35 a.m. in Sydney from 94.41 cents immediately before the report. The two- year government bond yield declined 2 basis points, or 0.02 percentage point, to 6.40 percent. Growth Forecast The central bank cut its forecast for growth in June 2009 to 2.75 percent from the 3 percent predicted in February. Gross domestic product will expand 2.5 percent in June 2010, compared to a previous outlook of 3 percent, today's report shows. Core annual inflation surged to 4.4 percent in the first quarter, the highest rate in almost 17 years, a report showed on April 23. ``The high rate of underlying inflation in the March quarter indicates that demand pressures that have been evident for some time are continuing to have a significant effect on pricing, and are allowing increases in input costs to be passed through into final prices,'' today's report said. The jump in consumer prices has occurred ``in an environment of limited spare capacity and earlier strong demand,'' the bank said. ``A significant slowing in the growth of demand from the rapid pace of 2007 will be needed in order to return inflation to the target over time. There are signs that such moderation is now occurring.'' Demand Moderating Recent reports support the central bank's view that the nation's $1 trillion economy is losing momentum in its 17th straight year of expansion. March home-building approvals fell six times as much as economists forecast, sales of newly built houses dropped for a second month, consumer confidence plunged in April to the lowest since 1993, and companies remained pessimistic for a third month in March. Gross domestic product slowed to 0.6 percent in the fourth quarter from the previous three months, when it expanded 1.1 percent. The first-quarter GDP report will be released on June 4. Households, grappling with higher gasoline and food costs, are also facing extra increases in mortgage rates by commercial banks. The nation's five largest lenders, led by Commonwealth Bank of Australia, have added an average of almost 90 basis points, or 0.9 percentage point, to home-loan interest rates this year. The Reserve Bank has added only 50 basis points in that time. China Demand ``A noticeable restraining impact is being exerted on household and business borrowing and on all overall domestic demand,'' today's report said. Borrowing by companies has slowed significantly. Offsetting slower domestic spending is the ongoing ``stimulus' from China's demand for Australian resources such as iron ore and coal, which is prompting companies including Rio Tinto Group to expand mines, railways and ports, the central bank said. The nation's terms of trade, a measure of export income, will rise by around 20 percent this year as new coal and iron ore contracts take effect, ``well above the average increase over the past four years, and higher than appeared likely a few months ago,'' the central bank said. There is a risk that expectations for higher inflation may become ``entrenched at higher than acceptable levels,'' driving up wages and prices, the bank said. Australia's labor market conditions ``remained strong,'' the report said. Australian employment rose in April, extending a record 18- month jobs boom that has generated 456,000 new jobs as companies spend A$57.9 billion ($54 billion) developing mines and oil fields, a report showed yesterday. The jobless rate was 4.2 percent in April, close to the lowest in more than three decades. To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net -------------------------- ( Inflation won't return to it's target band until 2010???-- Good Grief.... editorial note--- JP_)