Daily FNArena News - Australia

The Australian economy is booming, headline prices are raging, and both government contenders are intent on fiscal stimulus. The RBA is under the pump.

The leading index from Westpac and the Melbourne Institute has surprised with a bounce in August.

The Howard Government has announced tax cuts on the back of stronger than expected revenues but the move is likely to add to the current inflationary pressures in the Australian economy.

Shocked analysts have lost all confidence in AGL management following yesterday’s profit downgrade.

Publishing & Broadcasting’s de-merger proposal has been delayed as changes to tax treatments are assessed, brokers taking the view the risk the deal does not proceed are increasing.

What will happen to financial markets under what is increasingly looking like a change of government?

Westpac economists have lifted their expectations for the RBA cash rate to reach 7% by mid-2008 at the latest.

Higher household disposable incomes are supporting strong retail trade numbers, though ANZ Bank estimates the September quarter was likely the peak.

Australia’s unemployment rate is now at a 33-year low and the potential for this to flow through to higher wages and therefore inflation means interest rates appear certain to go higher.

Platinum Asset Management reported another poor FUM report for September but brokers covering the stock have not given up hope performance can improve.