Posted Sunday, 19 September 2010 at 22:02 by Michael Chan
Tagged: interest rates
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The Reserve Bank has warned the economy has little "spare capacity" which could drive higher inflation.
At a conference that One of our Shape Home loan consultant attended in Sydney on Friday , RBA assistant governor Philip Lowe said there are risks of a flare-up in inflation if investment and consumption are allowed to increase unchecked.
As reported in the Australian Financial Review, Lowe said the economy was operating with "a relatively limited amount of spare capacity", and consumers were urged to retrain spending or risk "costly adjustments. For the next year I think we will be travelling along pretty much close to full capacity, but probably just a little bit under it," Lowe said. "We are almost at what would be considered full employment".