RBA to lift interest rates in Q2 2011, experts say

Wednesday 22 December 2010

Article by Mozo

The Reserve Bank (RBA) will lift the official cash rate in the second quarter of next year, a number of leading analysts have predicted.

RBA to lift interest rates in Q2 2011, experts say

Economists from HSBC, ANZ and Westpac all told the Herald Sun they expected a hike in the official interest rate during the period from April to June 2011, with more rises likely to follow.

The predictions came as the RBA released the minutes of its latest board meeting which showed growing concerns about the risk of soaring inflation caused by high levels of business investment.

In addition, the minutes highlighted the need for households to keep borrowing and spending down and saving up in order to combat the inflation threat.

However, the RBA said it had been encouraged by the new-found restraint seen in household consumption recently.

"This restraint, if it continued, would provide some scope for investment to rise without causing aggregate demand to grow too quickly and inflationary pressures to build," the minutes said.

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