Australia鈥檚
benchmark interest rate, at 6.50%, is already the highest in the industrialized
world, after New Zealand.
Ignoring the pleas of the Treasurer, the Central Bank of has all but decided to
hike rates even further into the stratosphere at its next meeting. The country is in a bit of a pickle, since a
booming economy and the consequent inflation seems to demand a rate hike. At the same time, this rate hike will ensure
that Australia continues to
be on the receiving end of Japanese carry trades, and this is precisely what irks
Peter Costello, Australia鈥檚
Treasurer. In other words, the world鈥檚
massive economic imbalances will only be exacerbated by an Australian rate
hike, but this may be a moot point as far as the Central Bank is concerned. The Sydney Morning Herald reports:
Instability on global financial markets between now and the
next Reserve Bank board meeting on Melbourne Cup day is seen by economists as
the only force that could stay the bank's hand from raising rates to the
highest level in a decade.
Read More: Look out for the tsunami, says Costello
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