10 Mar 2010

Australian central bank warns of inflation pressures

1:49 pm on 10 March 2010

Australia's central bank says the economy is set to grow at, or above, the average rate over the next few years, raising inflation pressures.

Australian Reserve Bank assistant governor Philip Lowe says the country's main challenge will be to expand the supply side of the economy to keep prices in check.

He says there is also the challenge of funding the building of new houses, when business investment is near record highs.

The central bank has hiked the cost of borrowing to 4% in recent months as the economy picks up.