Westpac is confident about future strong economic growth in the next three to nine months, after publishing a key forward indicator of activity.
The Westpac-Melbourne Institute Leading Index of Economic Activity was 5.6 per cent in August, which is well above its long-term trend rate.
Westpac chief economist Bill Evans says the bank predicts economic growth this year of 4.5 per cent, which will put pressure on interest rates.
"Certainly a possibility in November. It will depend upon the inflation number that's released on the 24th of October," he said.
"They're notoriously difficult to forecast and if the number is a surprisingly low number then we won't see a rate hike, if it's a very high number then I expect the Reserve Bank will have to give that a lot of consideration."
Mr Evans says there should be continued strong consumer spending, employment and business investment.
"Certainly the maintenance of strong growth will continue to put pressure on our scarce resources particularly in the labour market and we do expect that we will see higher interest rates over the next three to six months," he said.
Mr Evans says with growth in Australia expected to remain strong for some time, the Coalition's recent tax cut announcement is not surprising.
"Now of course its this much faster growth that's given the Government the scope to provide these tax cuts," he said.
"The higher growth over three years is increasing the fiscal position of about $50 billion and of course that's more than compensating for the $34 billion increase in tax cuts."
