Australian inflation to stay up - Swan

Fairfax

RATES OUTLOOK: Inflation is likely to stay high for some time but interest rates will not necessarily continue to rise, Australian Treasurer Wayne Swan says.

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Inflation is likely to stay high for some time but interest rates will not necessarily continue to rise, Australian Treasurer Wayne Swan says.

A new report today showed inflation remained at four per cent for a second consecutive month in March, well above the Reserve Bank of Australia's two to three per cent target.

However, economists widely expect the central bank to leave its official cash rate unchanged at a 12-year high of 7.25 per cent after tomorrow's monthly board meeting.

Mr Swan said it was too early to tell if measures to fight inflation, including interest rate rises, were working.

"I think we can expect to have elevated inflation for some time, which is why the prime minister and I have been stressing the importance of tackling inflation in the short-term and in the medium-term," he told ABC television.

But asked whether continued high inflation meant rates would continue to climb, Mr Swan said: "It doesn't necessarily mean that at all, in fact the Reserve, when they took their decision one month ago, I think had a very open mind about the future course of rates."

Mr Swan said official figures had not yet shown a significant increase in the number of people having their homes repossessed but other figures had suggested repossessions were on the rise.

"And that's something we are keeping an eagle eye on because we all know there are a lot of people out there under tremendous financial pressure as a result of the eight interest rate rises that have occurred in the last three years," he said.