The Reserve Bank (RBA) has left official interest rates unchanged. Today's announcement, following yesterday's board meeting, leaves the cash rate at 5.25%.
While most economists still believe the central bank will lift rates before year's end, long-term forecaster Dr Frank Gelber of BIS Shrapnel predicts the real issue facing the economy is not higher rates, but inflation.
Gelber, speaking at an economic forecasting conference held yesterday in Brisbane, forecasts that a non-residential building boom will fuel inflationary pressures in the broader economy, forcing the RBA to significantly lift rates through 2006 and 2007. The end result will be an economy-wide recession.
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