Inflation pressures worry Interest rates

The RBA has warned Australians that it may be forced to hike the official cash rate sooner rather than later in a bid to deal with the country’s two speed economy.

Australia’s mining-fuelled economy is running out of space to grow, which could force the RBA to start increasing rates late this year or early 2011.

The RBA choose to leave rates on hold in September for the fourth consecutive month, crediting uncertainty surrounding the global economic outlook, consumer spending and Australia’s political situation for the Board’s decision.

With the election now finalised the RBA may be inclined to lift the cash rate as early as November.

A growing number of home owners are worried that interest rates will rise by 0.5%pa in the near future. I can see 0.25%pa by the end of the year and another 0.25%pa early next year if things continue to grow as they are now.


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