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Rates to approach 10 per cent within 3 years

25/08/2010

Official interest rates as set by the Reserve Bank of Australia will rise by about two per cent to 6.5 per cent and retail standard variable home loan rates will follow and go up beyond 9 per cent within three to four years, according to BIS Shrapnel’s Long Term Forecasts report for 2010-2025.

“Labour shortages and a synchronisation of construction cycles will lead to a build-up in inflationary pressures over 2011/12 and 2012/13,” BIS Shrapnel senior economist Richard Robinson said. “The RBA will be forced to respond by raising interest rates to a maximum of 6.5 per cent, which will take mortgage rates back over nine per cent and send housing activity into a controlled downturn over 2013/14.”

Source: The Advisor



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