Fed: Costello says US slowing second great challenge

AAP General News (Australia)
02-01-2001
Fed: Costello says US slowing second great challenge

CANBERRA, Feb 1 AAP - Treasurer Peter Costello said today the slowing US economy was
the second greatest challenge to the Australian economy since the Asian financial crisis.

"From our perspective, the greatest challenge to the Australian economy in the recent
period was when the Asian financial crisis hit and all of our region went into recession,"

Mr Costello told ABC radio.

"This is going to be the second great challenge, the dramatic slowing of the US economy
and surging energy prices, which we've seen over recent months."

Mr Costello believed that Australia's low-inflation environment indicated there was
room for the Reserve Bank of Australia to cut interest rates.

Overnight the US Federal Reserve, seeking to prevent its faltering economy from slipping
into a recession, cut interest rates by another half percentage point.

"When the Reserve Bank board considers the inflation situation in Australia and when
it considers what's happening around the world I suspect it will make its own judgement,"

Mr Costello said.

"I don't want to pre-empt its judgement, but you would have to say that with the low-inflation
result that we saw, inflation is not providing the problem that some people thought it
would during the course of latter last year."

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KEYWORD: ECONOMY COSTELLO

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