You Can Bet On Another Rate Rise

Due to the inflation figures being higher than expected economists are tipping a fourth consecutive interest rate rise when the Reserve Bank meets next Tuesday.

Figures released by the Australian Bureau of Statistics have revealed that inflation rose 0.5 per cent in the three months to December for an annual rate of 2.1.per cent.

These figures were slightly higher than the anticipated 0.4 per cent quarterly rise and a 2 per cent annual pace.

Treasurer Wayne Swan has warned the banks to expect trouble if they put interest rates up higher than it is absolutely necessary. The treasurer also pointed out that Australia was the only advanced economy not to go into recession in 2009, and the only advanced economy to have grown in 2008-09 and that we had the second lowest unemployment.

Economist Helen Kevans of JP Morgan has warned borrowers to prepare for another interest rate rise.

The International Monetary fund has predicted that the Australian economy will grow at 2.5 per cent this year up from the 2 per cent that was originally forecast last October.

Price changes since the end of 2009:

Access Economics are also predicting a mild recovery for the economy.

Rising rents and electricity prices will feed into inflation and cause the RBA gradually to raise official interest rates by up to 5.5 per cent.