The Reserve Bank of Australia(RBA) has increased its inflation and economic growth forecast, which has added to speculation of the possibility that the Reserve Bank of Australia will increase borrowing costs for the third time this year.
The RBA released a quarterly statement on monetary policy today, stating the the core inflation rate will be 3 percent over the next two years. It exceeds the previous forecast of 2.75 percent.
The Reserve Bank of Australia raised interest rates close to a six year high of 6 percent this week, due to factors like higher consumer spending, increased wages and record commodity prices.
'It looks like the bank intends to increase interest rates again,' said Stephen Walters, chief economist at JPMorgan Chase & Co. in Sydney.
'The inflation forecast is at the top of the bank's range, and the bank is suggesting the domestic economy is accelerating.'
The central bank also said that Australia's A$878 billion economy will expand to 3.5 percent over the next yaer or so, which was higher than expected.
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