RBA insider: Expect five rate hikes by end of 2011

A former Reserve Bank honcho has predicted there will be five interest rate hikes by the end of next year.

Paul Bloxham, who recently left his position as head of financial conditions at the RBA for a job at HSBC, this week issued a note to clients forecasting that the central bank would lift rates by 25 basis points before Christmas.

In addition, he predicted a further four increases next year, bringing the official cash rate up to 5.75 per cent by the close of 2011.

Mr Bloxham suggested the RBA would be forced to act as the commodity boom shows little signs of abating.

"It has been clear for a while that Australia weathered the global financial crisis better than most, but the economy's resilience continues to surprise," he said.

The analyst also noted that Australia's economic upturn has started with consumer price inflation already in the top half of the Reserve Bank's target range.

His comments come after the RBA itself recently pointed to an imminent rate rise.

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