SINGAPORE, July 22 (Reuters) - National Australia Bank (NAB) raised its forecast for Australia's benchmark cash rate on Friday, and now expects it can hit a peak of 2.85% by the end of the year.
Australia is grappling with accelerating inflation and this week the Reserve Bank of Australia Governor Philip Lowe suggested rates might need to rise to a neutral level of 2.5%.
NAB had previously expected the cash rate at 2.35% at the end of the year and a peak of 2.6%.
"The recent drop in the unemployment rate to 3.5% is too large to ignore," NAB's economists said in a note. "We tentatively have (forecast) 50bp in August and September, followed by 25bp in the following two meetings."
News: NAB NAB raises Australia interest rate forecast
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