ANZ predicts more official rate rises this year Posted Tue May 27, 2008 6:19pm AEST Updated Tue May 27, 2008 6:44pm AEST
The ANZ is expecting core inflation to continue to worsen. ANZ bank has increased its interest rates forecast and is predicting that the Reserve Bank will lift rates twice before the end of the year.
ANZ was forecasting that official interest rates would remain on hold for the rest of the year, but now it is predicting the RBA will lift rates by 0.25 of a per cent in August, and by the same again probably in November.
The co-head of ANZ's Australian Economics Research, Sally Auld, says the bank is now expecting core inflation to continue to worsen, reaching a peak of 4.9 per cent in the second half of this year.
"We do believe that the inflation outlook has actually deteriorated here in Australia," Ms Auld said.
"[The Reserve Bank] is an inflation-targeting central bank; in our view it has very little tolerance for any upside to surprises on inflation.
"In order to fulfil its mandate - which is obviously in the best interests for the Australian economy in the medium term - further rate rises will be the appropriate policy."
ANZ's prediction is bold when compared to the other major retail banks.
Westpac and National Australia Bank say rates will stay on hold this year, while the Commonwealth Bank is tipping one 0.25 of a per cent rise.
