RBA to raise rates by 0.5 per cent this year, expert claims

Monday 04 April 2011

Article by Mozo

The Reserve Bank of Australia (RBA) is likely to increase the cash rate over the course of 2011, according to one investment bank.

Cash rate to rise 0.5 per cent this year?

TD Securities recently revised its forecast for this year, suggesting that rather than a one per cent increase as was previously expected, the RBA would only raise the cash rate by 0.5 per cent, reports the Herald.

Annette Beacher, an economist with TD Securities, said there were "contrasting trends" on the inflation gauge, but that inflation appears to be within the RBA's target range.

She explained that the revision to the forecast of the central bank's predicted cash rate increase for 2011 was in part down to the lower-than-expected growth in the cost of consumer goods.

At the end of last month, investment strategy head for Morgan Stanley Smith Barney Malcolm Wood said the rate may drop by between 25 and 50 basis points in June, the Advertiser reported.

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