Treasurer Wayne Swan has put pressure on the RBA to further drop interest rates believing it will help cushion the economy from the global financial crisis.
The RBA last month kept the cash rate at 3.25 percent, the lowest in 45 years, but Swan believes the bank has “room to cut rates further if necessary.”
In a conference to investors in Toyko yesterday, Swan said that Australia is in a position to drop interest rates, a “luxury that many of the world’s key central banks no longer have.”
The economy shrunk 0.5 percent in the fourth quarter from the previous three months, and the jobless rate rose to an all time high of 5.2 percent in February.
The RBA board will meet next week on April 7 to decide whether to lower interest rates, with economist predicting the cash rate will be dropped to as low as 2.75 percent.
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