RBA 'has to increase interest rates soon'

The Reserve Bank of Australia (RBA) may consider increasing interest rates in light of recent figures indicating an increase in the cost of groceries, petrol and utilities.

Last month, the consumer price index rose by 1.6 per cent, which was higher than many economists expected, reports the Herald Sun.

Adam Carr, senior economist with Icap, asserted that the central bank needs to increase rates soon, claiming that the decision makers "don't have a choice".

"The arguments for them to hike are compelling [and] the arguments for them to hold are non-existent," he stated.

With the cost of food increasing across the world, Mr Carr said the RBA needs to take control of the situation in Australia.

Interest rates have remained steady since November 2010 when the RBA hiked rates to their current level.

At the moment, they are set at 4.75 per cent, but in 2008 they reached a peak at 7.25 per cent.

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