It Must Be Election Year in Australia
Australia has spent most of its windfall tax revenues from the commodity boom, leaving just 1% of GDP in budgetary cash surplus each year since 2002. The 2007-08 budget released today compromised between prudence and populism. To the former, it seeks to increase productivity in the face of full employment and capacity tightness. To the latter, more tax cuts to boost household demand. ANZ Investment Bank believes the net effect of the budget will be to offset monetary policy tightening…boding higher interest rates and upside for the AUD/USD.
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