Interest rates to rise earlier

Experts predict there is an 80% chance interest rates to rise over the coming quarter.

While the RBA decided to leave rates on hold last quarter, governor Glenn Stevens has hinted that rates will go up sooner rather than later.

It appears the global economy will record reasonable growth over the coming year, though not as strong as the past year.

Of course, that forecast could turn out to be wrong. Something could turn up internationally or at home that produces some other outcome.

But if downside possibilities do not materialise, there will be a fairly robust upswing. Clearly this puts pressure on the home loan interest rates.

The RBA is keen to keep inflation in a target band of two to three per cent on average over the medium term.

The Reserve Bank rapidly increased the cash rate, from three per cent to its current 4.5 per cent, in six increments between October last year and May.


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