Australian consumer confidence fell in January to a 7-month minimum of 104.6 from 111 in December due to the concerns that flood damage will weaken the nation’s economy.

According to the estimates of Australia & New Zealand Banking Group Ltd. economists, the reconstruction of affected region may cost A$20 billion ($19.9 billion) or about 1.5% of GDP.

Reserve Bank of Australia left the overnight cash rate target at 4.75% last month, after 7 increases since October 2009 naming its policy “mildly restrictive.”

Analysts at Westpac claim that even before the advent of the floods they didn’t expect another rate increase until the second quarter of 2011. Now the next rate increase may be put off to the second half of the year. The specialists are sure that the rates will remain unchanged on the February 1 meeting.

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