Two more rate rises predicted in 2010

The Reserve Bank will not raise rates this week, according to economists but could raise rates by up to half a percentage point before the end of 2010. 15 economists said they expected the RBA to leave the cash rate at 4.5 per cent this week. Seven of the 15 surveyed expectedg a rate rise of between 25 and 50 basis points in the final three months of 2010.

ICAP economist Adam Carr predicted two 25 basis point hikes in the December quarter. “We still have to wait for the next consumer price index (CPI) and that will be telling,” he said. “I'm basing my two rate hikes on the idea the quarter two CPI was an anomaly and that we'll see a pick up in inflation in quarter three.”

Source: Sydney Morning Herald