Interest rate rise confirmed by RBA : Australia

The Reserve Bank of Australia (RBA) has indicated a rise in interest rates will come sooner rather than later, analysts have predicted.

The bank concluded its latest quarterly monetary policy statement by saying that further tightening of monetary policy is “likely to be required at some point” to keep inflation within the two to three per cent target – which could impact those seeking a new home loan.

JPMorgan chief economist Stephen Walters told the Sydney Morning Herald the RBA statement was “pretty clear” and predicts the next rate rise will occur in August.

The RBA continues to express concerns Australia’s mining boom could put the rate of economic growth into overdrive.

It expects an underlying inflation rate of three per cent by December, which is a year earlier than forecast two months ago.

The Australian dollar rose more than one per cent to US$1.07 in reaction to the RBA’s inflation-shy report, which analysts viewed as implying an early interest rate is likely.

The cash interest rate has been held at 4.75 per cent since November 2010, which the RBA described as a “mildly restrictive stance of monetary policy … appropriate over this period given the general outlook facing the Australian economy”.

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Interest rate rise confirmed by RBA
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