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Rates will rise in December: NAB

10 November 2009 Reporter

NAB has said the Reserve Bank will raise interest rates 25 basis points in every board meeting until March.

According to the bank’s latest monthly business survey and economic outlook, the official cash rate should climb to 4.25 per cent by early 2010.

NAB’s chief economist Alan Oster said growing consumer confidence and an improvement in business conditions had increased the likelihood of another 25 basis point increase before Christmas.

The business conditions index surged nine points over the last month to a reading of +12, which is substantially above the long run average reading of +3 index points.

“While confidence has surged in recent times, business conditions had remained significantly below long term averages. That has now changed. In many ways, very high business confidence readings appear to be bearing fruit,” Mr Oster said.

“This is a pleasing result and as such, we expect there to be a 25 basis point increase in every RBA meeting till March.”

Rates will rise in December: NAB
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