Fed: Turnbull says Swan aggravating inflation problem

AAP General News (Australia)
04-22-2008
Fed: Turnbull says Swan aggravating inflation problem

CANBERRA, April 22 AAP - Federal opposition treasury spokesman Malcolm Turnbull has
accused the government of aggravating inflation by constantly talking it up.

With the consumer price index (CPI) figures for the March quarter to be released tomorrow,
Mr Turnbull says he remains concerned about inflation.

He said Treasurer Wayne Swan had worsened the situation by declaring soon after the
federal election that inflation was out of control.

"He and the prime minister have said that again and again. It is not true, it is reckless
to say because inflation is very much a function of expectation," Mr Turnbull told ABC
radio today.

The opposition spokesman said if people thought inflation was rising and that it was
not under control, then that is what would happen.

"We will have to see what the numbers are, but obviously there is a lot of momentum
in the system," he said.

"I think that Wayne Swan has acted in a way that is calculated or that will have the
inevitable consequence of aggravating inflationary expectations.

"He is aggravating the problem, he is exacerbating the problem."

The Reserve Bank of Australia (RBA) has said repeatedly in recent weeks that it expects
the annual CPI to jump to around 4.0 per cent in the March quarter, up from 3.0 per cent
in the December quarter.

That is well above the RBA's two to three per cent inflation target, raising concerns
of further interest rates rises.

But the RBA also has said it will likely downgrade forecasts for future inflation readings,
given the early signs of slowing domestic demand following successive increases in interest
rates since August.

AAP mb/pw/it/bwl

KEYWORD: ECONOMY TURNBULL

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