Interest rates to rise above ‘neutral’ setting

Interest rates to rise above ‘neutral’ setting

by 0 comments

Despite a slight drop in business confidence in March, economists remain bullish about the future of interest rates.

According to NAB’s latest monthly business survey and economic outlook, the RBA is expected to raise the official cash rate in May, August, September and December – taking it to 5.25 per cent by year’s end.

NAB chief economist Alan Oster said the recent spate of economic data would encourage the RBA to move monetary policy back to normal relatively quickly and move into a significantly tight stance in 2011.

“We should see cash rates moving up to 5. 25 per cent by end 2010 – which would, in an environment of higher bank spreads, be a touch on the tight side of neutral,” Mr Oster said.

"Moving into 2011 we expect rates to rise to 6 per cent which is both above current market pricing and around 0.75 per cent above neutral.”

Despite a slight drop in business confidence in March, economists remain bullish about the future of interest rates.

According to NAB’s latest monthly business survey and economic outlook, the RBA is expected to raise the official cash rate in May, August, September and December – taking it to 5.25 per cent by year’s end.

NAB chief economist Alan Oster said the recent spate of economic data would encourage the RBA to move monetary policy back to normal relatively quickly and move into a significantly tight stance in 2011.

“We should see cash rates moving up to 5. 25 per cent by end 2010 – which would, in an environment of higher bank spreads, be a touch on the tight side of neutral,” Mr Oster said.

"Moving into 2011 we expect rates to rise to 6 per cent which is both above current market pricing and around 0.75 per cent above neutral.”

promoted content
Recommended by Spike Native Network
Listen to other installment of the Real Estate Business Podcast
reb top 100 agents 2016

With a combined sales volume of $13 billion in 2016, the Top 100 Agents ranking represents the very best sales agents in Australia. Find out what sets them apart and learn their secrets to success.

featured podcast

featured podcast
How this agent's commitment to clientele built him a 25k-strong client base

In this episode of Secrets of the Top 100 Agents, host Tim Nearly talks to RT Edgar’s Glen Coutinho who ranked number six in this year’...

View all podcasts

How effective are testimonials as a marketing tool?

Not effective at all
Somewhat effective
Very effective
They are the most effective tool there is
Do you have an industry update?