RBA holds, Fed thinking of holding, ECB and BoE have more to think about

The Reserve Bank of Australia is apparently comfortable with current interest rates. From Bloomberg:

Australia's central bank left its official interest rate unchanged for a 13th month in response to slower growth in wages, consumer prices and the economy.

Reserve Bank of Australia Governor Ian Macfarlane and his board left the overnight cash rate at 5.5 percent, as forecast by all 22 economists surveyed by Bloomberg News. The bank last raised borrowing costs in March 2005.

Speeches yesterday from Fed officials suggest that they could be getting comfortable too. From Reuters:

The U.S. economy is close to a balanced growth path, Richmond Federal Reserve President Jeffrey Lacker said on Tuesday, suggesting the Fed's long campaign of interest rate increases is nearly over.

"We've been aiming toward converging to a balanced growth path that we can continue on a sustained basis, as we saw from 1994 to 2000. And I think we're pretty close to it," Lacker told reporters after a speech here.

Lacker's optimism on a "balanced" economy dovetailed with comments from Dallas Fed chief Richard Fisher, who said globalization may mean a tight U.S. labor market does not pose the same inflationary risk as it might have in the past.

And from Bloomberg:

The dollar declined for a third day against the yen on speculation the Federal Reserve is getting closer to ending a 21-month policy of raising interest rates... The Fed's Kansas City Fed President Thomas Hoenig, speaking yesterday in Kansas City, said higher rates will take hold later this year, suggesting the Fed is almost done raising rates... Hoenig on March 31 said the overnight lending rate may be in the "upper end" of the so-called neutral range that neither spurs nor restrains growth.

However, there were more signs yesterday that the economy is heating up in Europe.

Euro-zone industrial producer prices rose 0.5 percent in February month-on-month and 5.4 percent year-on-year. The corresponding figures for the EU25 were 0.4 percent and 7.0 percent respectively. Excluding energy, prices rose 0.3 percent in both the euro zone and the EU25.

Meanwhile, unemployment in the euro zone dropped to 8.2 percent in February from 8.3 percent in January, while in the EU25, the unemployment rate remained unchanged at 8.5 percent.

In the UK, the Bank of England reported yesterday that mortgage equity withdrawal in the last quarter of 2005 rose to the highest since the third quarter of 2004, while the Chartered Institute for Purchasing and Supply said its seasonally-adjusted index for construction rose to 54.7 in March, the highest since 57.2 in September 2005, from 51.9 in February.