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SYDNEY, AUSTRALIA - AUSTRALIA'S economic growth is likely to slow later this year, removing pressure on the central bank to lift interest rates, a survey released on Wednesday predicted.
The monthly Westpac-Melbourne Institute leading index, which indicates the likely pace of economic activity three to nine months into the future, was 4.1 per cent in January, down from 4.7 per cent in December.
Westpac chief economist Bill Evans said it was the first time the index had been below its long-term average of 4.2 per cent since November 2005 and was consistent with a slowdown in growth in 2008 and 2009.
Mr Evans said that when coupled with a 9.1 per cent collapse in consumer confidence recorded last week, it appeared the central Reserve Bank of Australia's current tightening cycle was over.
'We do not expect that the Reserve Bank will see the need to raise rates again in this long tightening cycle, which began in May 2002,' he said.
'At this stage it also appears that rates will remain high for some time with rates likely to remain around current levels for at least the remainder of this year.'
The Reserve Bank of Australia lifted rates 0.25 percentage points to a 12-year high of 7.25 per cent this month, the 12th rise since mid-2002, as it attempts to keep inflation within its 2.0-3.0 per cent target range amid a resources boom fuelled by unprecedented demand from China.
However, economists have predicted that a combination of falling domestic demand caused by the most recent rate hikes, global market turmoil and increased charges levied by lenders have done enough to prevent more rises.
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