Australia: Rates: The Quandary Down Under

The Reserve Bank of Australia is on the horns of a dilemma: The Aussie dollar sank to a 12-year low of 57.99 U.S. cents on June 16, as the Asia crisis began to throttle the economy. The RBA may need to hike interest rates to support the dollar and thwart a round of import-led inflation, but higher rates could turn an economic slowdown into a recession. What will the central bank do?

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