The increase in both the current account...

The increase in both the current account deficit and inflation will not divert the Australian government from its current economic policy, according to Treasurer Paul Keating.

In a speech prepared for delivery to economists, Keating said last week that he expected demand to moderate through 1989 and 1990 as recent tightening of monetary policy takes effect. “I believe we now have reached a stage of sufficient tightening,” he said.

An unexpected $1.54-billion current account deficit in January and a 7.7% inflation rate for 1988 were “undoubted setbacks” but were symptomatic of economic growth, much of which was going into business investment, Keating said.