Rate rise likely despite modest inflation numbers
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BN
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28/01/2010 12:00:00 AM
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Modest inflation figures released yesterday have not stopped economists from continuing to predict the RBA will raise rates for a fourth consecutive meeting in a row.
Figures released by the Australian Bureau of Statistics found inflation grew 2.1% last year. The biggest price increases were in fruit, which rose by 15.9% as a result of poor weather.
Petrol prices were down 2.8%, while the cost of living grew more dramatically in Melbourne, Sydney, Perth and Hobart.
The RBA has a target band for inflation set at 2-3%. And although the 2.1% figure sits within the range, economists are still predicting rates to rise. The concern is that underlying inflation combined with strong economic recovery will lead to problems over the next 12 months.
Prime Minister Kevin Rudd has signalled that interest rates are bound to rise, as they were brought down to record lows during the GFC.
Interest rate hike rumours heighten - Only one week to go before the Reserve Bank of Australia meets again to discuss the prospect of raising rates for a fourth time in a row and economists are tipping an increase is likely.
Low inflation figure unlikely to affect rate decision - The official inflation rate is scheduled to be released next week, but despite early predictions of a relatively "benign" figure it is believed the Reserve Bank of Australia will continue to raise rates.
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