Westpac 'expects rate rise very soon but not in June'

A senior official at Westpac has stated that the financial institution believes the Reserve Bank of Australia will have to increase interest rates in the near future but said it is unlikely to be in June.

Bill Evans, chief economist at Westpac, asserted that the markets seem to think the case for a hike will not be made for more than a year.

His comments come as the Westpac-Melbourne Institute Leading Index revealed the pace of economic activity in March this year was 5.3 per cent, up 1.9 percentage points on the long-term trend.

"Market pricing now gives virtually zero probability to a rate hike by the bank at the meeting," Mr Evans stated.

"Despite market expectations we continue to expect a rate move in the very near term," he added.

Interest rates fell to three per cent in April 2009 and since then they have risen to the current level of 4.75 per cent.

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