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Australia’s ETF is reaping the rewards delivered by an increasingly stable economy: growth is up, unemployment is down and inflation is low. But one international organization has a suggestion for even more improvement.

According to Central Bank official Philip Lowe, Australia is in a much better position than other advanced nations, benefiting from growing employment numbers, high investment levels and high commodity prices, reports Jacob Greber for BusinessWeek.

Signs of an economic recovery have pushed policy makers to increase borrowing costs last year. But, the Reserve Bank of Australia (RBA) is keeping interest rates unchanged this month amid concern that the European sovereign-debt issue may enervate the global recovery.

The Central bank aims to keep inflation between 2% and 3%. The bank estimates inflation will rise to around 2.5% this year and “just a little higher” next year.

The International Monetary Fund (IMF) suggested that the RBA may consider lifting inflation targets to 4%, but RBA Treasurer Wayne Swan countered in saying that any weakening of the official commitment to keep inflation low will make it harder for the bank to get underlying price growth back into the target zone, reports Michael Stutchbury for The Australian. The IMF argues that higher inflation provides “improved maneuverability” for Central Banks when they are affected by events like another financial crisis, a pandemic or a terror attack.

The Australian index of leading economic indicators increased 0.5% to 256.4 in December, the highest point in more than a year, writes Jacob Greber for BusinessWeek. The Westpac leading index tracks eight gauges, including company profits and productivity, to provide a measure of how the economy will do over the next three to nine months. The coincident index, a measure of the state of the economy, rose by 0.4% to 245.8 in December.

  • iShares MSCI Australia (NYSEArca: EWA)

Max Chen contributed to this article.

Source: Australia ETF: Steady Growth, But Is Inflation Too Low?