High inflation figures could mean third rate rise for 2000

The Reserve Bank of Australia Board meets again next Tuesday. Inflation figures released today suggest a further rise in Australian official cash rates appears more likely than not.

Inflation has hit a four-year high of 2.8 per cent for the March quarter. The Australian Bureau of Statistics said prices rose 0.9 per cent in the quarter, up from 0.6 in the December quarter, and the equal highest quarterly rise in four-and-a-half years.

Higher petrol prices, which rose 7.8 per cent in the quarter account for nearly half the increase whilst other significant factors included rising house prices, which were up 1.6 per cent, cigarettes, education, fresh vegetables, pharmaceuticals and vehicle insurance.

Following the release of the data the Australian Dollar was still trading at just above the 59 cent mark this afternoon, although it did not fall as far as some analysts were predicting.

As such this level will undoubtedly weigh into the RBA’s considerations and eventual decision on Tuesday and we see another 0.25% rise as a distinct possibility.

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