RBA Will Raise Australian Interest Rates In March

Interest Rates in Australia Tipped to Rise in March Reserve Bank Meeting

The ink was barely dry on the Reserve Bank's decision to leave interest rates unchanged for February when economists and commentators hit the airwaves to declare a rate rise for the March RBA meeting.

By all accounts, the commentators could be right. According to the RBA statement explaining the decision to leave rates on hold, they wont hesitate to lift the official cash rate if they feel the economy has the potential of overheating.

Glenn Stevens statement released at 2.30pm on Tuesday said that "If economic conditions evolve broadly as expected, the Board considers it likely that monetary policy will, over time, need to be adjusted further in order to ensure that inflation remains consistent with the target over the medium term."

That could mean a healthy dose of interest rate rises for the remainder of 2010. The latest inflation figures show a worrying upward trend, particularly in the underlying inflation measure. That latter figure is the one the RBA pays closest attention to.

But not only that, the housing market is showing signs of a growing boom. Some have even called it a bubble. With unemployment heading in a downward direction as well, the RBA are likely to pounce in March according to economists. At this stage, the prediction for March is for a 25 basis point rise, or one quarter of one percent.

Commentators and economists views are mixed on the amount of interest rate rises for 2010, but most predict at least a 1% lift from their current position. The cash rate is currently at 3.75%.