PM paves way for further interest rate cuts

Prime minister Julia Gillard has suggested that further cuts to interest rates could be made as early as next month.

Speaking to a business audience on Thursday (April 19th), she stated the country is determined to achieve a budget surplus this year, which will pave the way for the Reserve Bank of Australia (RBA) to lower the standard cash rate.

The RBA has been under increasing pressure to reduce interest rates from business groups and trade unions, as the high value of the dollar is crippling many enterprises.

It sanctioned two consecutive readjustments at the end of 2011, but has chosen to keep the official rate at 4.25 per cent so far this year.

However, any further action is likely to depend on key official figures relating to inflation, which are due to be published next week.

"We can give the Reserve Bank room to move on monetary policy if it chooses to, knowing that an interest rate reduction is good for families and business," Ms Gillard commented.

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