St George predicts winter rate rise

07/02/2011

The Reserve Bank will continue its upward cycle of rate rises in May or June, according to St George chief economist Besa Deda.

"You have seen financial markets really push out the timing of any rate rises and if you look back at Hurricane Katrina in the US (in 2005) the market blew out the timing of any interest rate rises only to reverse the trend a few months later," Ms Deda said.

The RBA said yesterday in its quarterly Statement on Monetary Policy: "While the floods in eastern Australia are expected to have a material effect on the near-term quarterly profile of economic activity, the medium-term outlook for the economy is broadly unchanged.

"All up, it is a reasonably positive statement. It is consistent with its tightening bias," RBC Capital Markets economist Su-Lin Ong said. "It's a reminder to the market that it is more likely than not we'll get some interest rate hikes later on this year."
Courier Mail