Australia Could Hike Interest Rates Five Times By 2012

Australian Women

Many currencies are rising against the dollar after yesterday’s FOMC statement, but the Australian dollar is continuing what has been a massive run since June.

It’s increasingly clear that as the U.S. will keep monetary policy easier for longer, Australia is soon about to begin hiking interest rates rather aggressively.

Some forecasts expect the Australian central bank to increase its key interest rate five times between now and 2012, in a bid to control inflation, according to the Australian:

National Australia Bank, one of Australia’s largest, today warned homeowners to prepare for an interest rate rise next month.

Changing its official forecast, NAB said it believed the Reserve Bank will hike interest rates by 25 basis points to 4.75 per cent when it meets on October 5.

Financial markets believe a move in interest rates next month is a line-ball call, but analysts are certain rates will be higher by the end of the year.

Here’s the Aussie dollar’s run, which if aggressive interest hike forecasts are true, could have a lot further to go:


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