RBA Signals Further Interest Rate Rises Likely Financial Schools Reviews

RBA Signals Further Interest Rate Rises Likely

Written by admin on November 6, 2009 – 5:28 pm

Australian economists believe that more interest rates are likely following the Australian central bank raising its growth forecasts for the Australian economy.

On Friday, the Reserve Bank of Australia issued its quarterly statement on monetary policy, in which it said that official interest rates remained relatively low.

The central bank has lifted rates twice over the last two months, hiking interest rates by 25 basis points in October and again at the start of November.

Many analysts believe that a further rate hike in December is likely, and would not pause the tightening cycle until mid 2010, or until the official interest rate stands at 4.25 per cent.

The central bank has forecast GDP growth of 1.75 per cent for the 2009 calendar year, and expects the economy to grow by 2.25 per cent for the year ending June 2010, and 3.25 per cent by the end of 2010.

Previously the RBA expected growth of 1 per cent and 2.25 per cent, respectively.

Despite the prospect of further interest rate hikes, some analysts suggest that mortgage borrowers will be spared an increase next month.

The central bank expects inflation to be moderated as a result of a slowdown in wage growth, and lower prices for imported good due to the stronger Australian dollar.

The RBA expects a further moderation in price pressures following a slowdown in wage growth and lower prices for imported goods.

The central bank has a target range for inflation of between two and three percent over the medium-term.

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