The Reserve Bank of Australia is optimistic that the European crisis will not affect Australia's resources boom while it focuses on the next inflation rate since interest rate increase is looming.

RBA also said that Asia's growth will remain steady and Australia will weather any hurdles from the European Union's financial crisis.

In a report released yesterday during a board meetting, Australia's medium-term outlook remains optimistic. This was told by deputy governor Ric Battelino in Sydney, who admitted that problems in Europe were serious.

"To the extent they've arisen in the past, they've usually been associated with wars and usually ended up being sort of solved by periods of inflation," Mr. Batellino said.

He also said that Australia's economy will continue to peak with the help of the mining industry and the government must find ways and means to cater to the mining contributors.

He also stressed that the European crisis is not reason why RBA has put interest rates on hold.

"We were very keen to get interest rates back to a more normal level, given the way the economy has evolved, and we basically feel we've done that," he said.
"So that was really the key reason why we now feel we've got the flexibility, because of what we did in the past, to take some time to see how things evolve.

Meanwhile, several economists predict that the June quarter inflation rate will be too high and may increase in August.

Mr. Battelino said if financial crisis in Europe worsens, it may slow the global economy.