RBA 'will increase rates twice this year'

The Reserve Bank of Australia (RBA) is expected to increase interest rates on loans twice in 2011.

Although the RBA has declared that rates will stay reasonably steady over the next couple of months, UBS strategist Matthew Johnson believes they will rise towards the end of the year.

"They certainly don't indicate that they will be doing anything right now, but our view is they will be tightening rates in the third quarter," he told the Herald Sun.

Indeed, the RBA has stated that current levels of 4.75 per cent will be maintained this month and pointed towards Australia's successful trade and likely investments in the mining sector behind their decision to keep "appropriate rates".

In a recent statement, governor of monetary policy decision at the RBA Glenn Stevens said that Australia's terms of trade were at the highest level since the 1950s and national income continues to grow significantly.

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