As the economy recovers, interest rates will start to climb up again, according to both Reserve Bank boss Glenn Stevens and Assistant Treasurer Nick Sherry.
Stevens told a lunch in Sydney yesterday that the RBA may not wait until unemployment peaks before moving to increase interest rates, while Senator Nick Sherry last night told business leaders in Melbourne that Australians will face budget cuts and interest rate rises as the economy recovers from the global financial crisis.
Investment bank JP Morgan’s chief economist, Stephen Walters echoed these sentiments, telling the ABC that the RBA will begin increasing the official cash rate in 12 months.
“We’re suggesting the Reserve Bank will raise interest rates about 1 to 1.5 percentage points from June next year.”
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