Fed: Rate rises on the cards - RBA chief =3 Canberra

AAP General News (Australia)
02-18-2005
Fed: Rate rises on the cards - RBA chief =3 Canberra

On the world economy, Mr Macfarlane said while it was possible for it to start to slow
down, he thought that unlikely.

"If we fail to overcome some of our capacity constraints and imports keep rising strongly,
... export volumes continue to be weak, then at some point - and I don't think it's in
the immediate offing - one could imagine a situation where the world economy slows down
or where all the other producers of resources greatly increase their supply," he said.

"That is certainly a scenario that you would have to bear in mind. I don't think it's
the most likely."

Instead, global economic expansion was likely to continue, Mr Macfarlane said.

His wishlist for the Australian economy was for capacity constraints to be lifted and
exports to be on the rise.

"And I would like to see domestic demand slow a little so imports don't grow as fast
and I would like to see the world economy continue to grow at a fair clip which I think
it will," he said.

"In terms of world economic expansion we've really only completed three years of world
economic expansion.

"Normally they'll last a lot longer than that. I think the outlook is more promising
but the (above) scenario is one that you couldn't rule out."

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