Fed: Weak Xmas sales boost case for rate cut

AAP General News (Australia)
02-02-2001
Fed: Weak Xmas sales boost case for rate cut

Lacklustre Christmas sales figures have boosted expectations of an interest rate cut
next week to give the economy a much-needed shot in the arm.

The Reserve Bank of Australia meets on Tuesday after a two-month break, faced with
growing evidence of an economic slowdown.

RBA assistant governor GLENN STEVENS has backed Treasurer PETER COSTELLO'S comments
that Australia is at risk of being pulled into a global slump, as it was during the Asian
crisis.

Mr STEVENS told a conference in Melbourne that a global slump, if it were to develop,
would be a serious problem for Australia - as it would be for all exporting countries.

Today, the Australian Bureau of Statistics reported that retail sales recovered a modest
0.8 per cent in December, adjusted to make up for the Christmas impact, after two months
of decline.

Westpac economist JUSTIN MCCARTHY says today's figures wouldn't change the RBA's thinking
on a rate cut, which markets expect to be either a quarter and half a percentage point.

AAP RTV kmh/sw/jn

KEYWORD: ECONOMY (CANBERRA)

2001 AAP Information Services Pty Limited (AAP) or its Licensors.