SYDNEY: Australia's strong economic growth is likely to slow later this year but not quickly enough to prevent further interest rate rises, a survey released on Wednesday said.
The monthly Westpac-Melbourne Institute leading index, which indicates the likely pace of economic activity three to nine months into the future, was 4.7 percent in December, down from 6.1 percent in November.
Despite the indications of a slowdown, Westpac chief economist Bill Evans said the index remained above its long-term average of 4.2 percent.
"That suggests solid momentum in the economy in the first half of 2008," he said.
"However it is reasonable to suggest that the growth pace is likely to slow in the second half of 2008."
Evans said economic growth was likely to hover around four percent in the first half of the year and slow to about 3.5 percent in the second.
He said the Reserve bank, which this month lifted interest rates to a 12-year high of 7.0 percent, remained concerned that strong growth was fuelling inflation and was likely to apply the brakes again with another rate hike.
"With the Reserve Bank now predicting that for no change in policy, inflation is likely to remain above the 2.0-3.0 percent target zone in both 2008 and 2009, there can be no other conclusion than the bank intends to further tighten policy until it feels confident that the economy will slow sufficiently to allow it to adopt a more reasonable inflation forecast.
"We do not believe that the bank would assess its current inflation forecasts as acceptable," he said.
- AFP/so
Survey predicts Australian growth to slow in late 2008 
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