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ISCOVER
Jessica Darnbrough
Over 40 per cent of brokers expect interest rates to rise over the coming quarter, according to an extensive broker survey.
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In the latest The Adviser’s Q3 sentiment survey, 40.4 per cent of mortgage brokers said they expect the RBA to lift the official cash rate before the end of the year – up from 35.2 per cent last quarter.
While the RBA decided to leave rates on hold last quarter, governor Glenn Stevens has hinted that rates will go up sooner rather than later.
Yesterday, Mr Stevens acknowledged in his statement on monetary policy that inflation was likely to trough at higher than normal levels during the current economic cycle.
"We think the global economy will record reasonable growth over the coming year, though not as strong as the past year - a strength that, incidentally, surprised most observers," Mr Stevens said.
"Of course, that central forecast could turn out to be wrong. Something could turn up internationally or at home that produces some other outcome.
"But if downside possibilities do not materialise, the task ahead is likely to be one of managing a fairly robust upswing. Part of that task will, clearly, fall to monetary policy."
The central bank's stated mission is to keep inflation in a target band of two to three per cent on average over the medium term.
The Reserve Bank rapidly increased the cash rate, from three per cent to its current 4.5 per cent, in six increments between October last year and May.
The underlying rate of inflation, which influences the Reserve Bank 's rate decisions, fell from 4.7 per cent in the September quarter of 2008 to 2.7 per cent at June 2010.
