Inflation won't be low enough to stop more rate rises - banks

Sunday 17 October 2004

Inflation will hold steady at 2.4 per cent for the September year, according to some bank forecasts, but it will not be low enough to prevent more interest rate rises.

By The Landlord

Inflation figures due out tomorrow are expected to show prices rose about 0.5 per cent in the September quarter, leaving the annual rise the same as in the June year.

Such a result would still leave the Reserve Bank "firmly on the path to higher interest rates", Westpac Bank said. The Reserve Bank is expected to lift the official cash rate to 6.5 per cent at the end of this month, with another rise in December.

Even a lower than expected inflation figure this week could be discounted as the Reserve Bank's main worry is that inflation will move to 3 per cent next year and in 2006.

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