NAB predict interest rates to hold

National Australia Bank has revised its rate forecast for 2011, pushing the first rate rise for the year back to August.

The NAB forecast on rate rises has been delayed from May to August, with the final adjustment to 5.25 per cent in November. The risk of an earlier or larger rate adjustment lies with faster growth and especially any sign of wage pressures from tighter labour markets or higher flood related prices.

However, I think this is unlikely to happen as orders for agricultural products and minerals remains weak and capacity utilisation is still trending sideways.

If inflation remains at its current level I think it unlikely to see an interest rate rise before August.



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