Big rate rises tipped for 2010

The unemployment rate fell in December to 5.5 per cent after the fourth consecutive month of rapid jobs growth. The good employment numbers put extra pressure on the Reserve Bank to raise interest rates again in February.

Financial markets are pricing in expectations of a further 25-basis-point interest rate increase, depending on the inflation figure to be reported in two weeks.

Some economists are even predicting that the RBA may have to raise official interest rates to above five per cent (they are now set at 3.75 per cent) which would push retail mortgage rates well above eight per cent.

Source: The Australian

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