Fed: Homebuyers gain reprieve on interest rates

AAP General News (Australia)
04-04-2007
Fed: Homebuyers gain reprieve on interest rates

CANBERRA, April 4 AAP - Homebuyers and the government can breathe a sigh of relief
after the central bank decided to leave interest rates unchanged after yesterday's monthly
board meeting.

But the reprieve could prove shortlived with financial markets betting on a rise in
May if inflation figures on April 24 show that last year's rate increases have failed
to dampen price pressures.

Reserve Bank of Australia (RBA) Assistant Governor Malcolm Edey said last month that
the outlook for inflation was "higher than ideal" and that "some of the factors pushing
up underlying inflation last year remain in place".

Since then economic data has been strong with demand for credit and retail spending
accelerating, and unemployment remaining around a 30-year low.

As is its practice when leaving interest rates unchanged, the RBA did not release a
formal statement on its rate decision.

An interest rate rise on May 2 would come just a week before federal Treasurer Peter
Costello is due to hand down his 2007/08 budget.

Interest rates have risen four times since the 2004 election, a poll won by the coalition
on the promise of keeping interest rates low.

AAP cb/mfh/evt/de

KEYWORD: RATES

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