Rates to rise more than 1% in 2010

The Reserve Bank will lift official interest rates by more than one full percentage point to about five per cent before the end of 2010, say economists.

A one percentage point rise on a current standard variable rate mortgage of $300,000 would lift monthly repayments by $203.

The RBA is expected to impose a fourth rate rise of 0.25 per cent in February or March, then pause to assess the impact of its rate rising campaign before lifting rates again.

JP Morgan economist Helen Kevans said “The RBA will continue tightening, yet it would not be surprising thereafter if the RBA takes a breather and sees how the economy reacts to those interest rate hikes. It will be looking to confidence, home loans, and of course, the data from offshore.”

National Australia Bank senior economist David de Garis said big new mining projects would place upward pressure on inflation, prompting the RBA to raise rates again.

Source: Courier Mail