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Homeowners can expect a further two rate rises in February and March, NAB’s chief economist Alan Oster has claimed.
According to Mr Oster, the Reserve Bank is likely to raise rates twice early next year and then leave them on hold for approximately six months.
“It is my opinion that the Reserve Bank will raise rates five consecutive times and then keep them on hold to see what happens to consumer confidence,” Mr Oster told Real Estate Business.
“The Reserve Bank will want to make sure they are doing the right thing by consumers and so I believe they will leave rates on hold for the majority of 2010. We expect the official cash rate to peak at 4.75 per cent next year and then gradually make its way up to 5.5 per cent by mid 2011.”
Mr Oster said despite the concerns of the industry, the RBA had made the right decision in moving rates.
“While we didn’t expect them to move until November, the fact of the matter is, they have moved for the benefit of the Australian economy,” he said.
“Rates were at an emergency low and the RBA needed to move them sooner rather than later.”
Business confidence increased three points in November, despite the two previous rate hikes.
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