Finance Finance News Rates tipped to rise in 2015

Rates tipped to rise in 2015

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It’s been a great year for borrowers as lenders woo them with low interest rates and deal-sweeteners, but all that is set to change.

Most economists think the Reserve Bank will begin hiking the cash rate in 2015.

Of the 13 economists surveyed by AAP, 10 expect a rise from its record low of 2.5 per cent during 2015, including seven who forecast the rate will hit at least 3.0 per cent.

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The cash rate has been at its current low since August 2013, marking one of the longest periods of stability since 1990.

And it’s widely expected to stay put when the RBA board meets on Tuesday for the last time this year.

“The RBA is still in wait-and-see mode, there are a lot of balls in the air,” said AMP Capital chief economist Shane Oliver, who is among those expecting rates to be higher in 12 months.

“If they do anything in the next six months, it’s more likely to be a cut than a hike.

“The slowdown in the mining sector is still feeding through, employment growth remains fairly subdued, wage growth is very weak – we’re a fair way off from the point where the RBA would say they’ve got enough confidence to start normalising interest rates.

“You’d need to see clear evidence that the economy is picking up across a range of areas, but at the moment, it’s just a bit too patchy.”

But HSBC chief economist Paul Bloxham said the next RBA move would be up, with a hike pencilled in for June.

“Looking into 2015, we remain of the view that the fundamentals are in place for a continued rebalancing of growth,” he said.

“Population growth is strong, finance is readily available at low cost, infrastructure investment is set to ramp up in 2015, a massive rise in LNG exports is expected in 2015, and increasing ties to Asia are expected to support Australia’s growth.”

The RBA will announce its interest rate decision at 1430 AEDT on Tuesday.

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