Tip: For Cup Day Interest Rate Rise

Oct 22, 2009 - Boris Chan

The possibility of a big interest rate rise next month is becoming more evident after the Reserve Bank revealed it was becoming increasingly concerned the economic recovery could stoke inflation.

Some economists are predicting it could be as much as half a per cent - or 50 basis points - on Melbourne Cup Day.

Minutes from the RBA's October meeting have revealed concerns about inflation - and a buildup of "imbalances" in the economy prompted its surprise 25 basis point rate rise to 3.25 per cent earlier this month.

Earlier this week economists stated that official inflation figures, to be released next week by the Australian Bureau of Statistics, would help the RBA determine the size and timing of its next move.

Savanth Sebastian economist with Commsec stated that the possibility of a half a per cent rate rise in November followed by a further quarter of a per cent in December is starting to look like a forgone conclusion.

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