SYDNEY (MarketWatch) -- HSBC's new Australia Chief Economist Paul Bloxham--who just left the Reserve Bank of Australia's economic analysis department--on Thursday said the central bank would keep rates on hold in October, with a November rate hike likely.
Bloxham most recently headed up the overseas economies and financial conditions sections within the RBA, and his outlook for policy is closely watched by analysts given his experience in forecasting the domestic economy.
He started with HSBC earlier this month after 12 years at the RBA, where he published papers on housing and household finances.
Bloxham said a rate hike by year end looks "in the bag", with a further 100 basis points of tightening forecast through next year. Given interest rates are currently at 4.5%, that would take the cash rate to 5.75% by the end of 2011.
"This is despite growing concerns over the developed economies and the possibility of further quantitative easing. While the recent appreciation of the Australian dollar will help to somewhat mitigate inflationary pressures, we still think that interest rates will need to rise," said Bloxham.
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