Reserve Bank in spotlight next week

By Phil Boeyen, ShareChat Business News Editor

Friday 15th March 2002

The Reserve Bank is expected to take a tighter stance on interest rates at its review next Wednesday but will leave the official cash rate unchanged, according to Deutsche Bank.

Deutsche Bank is still picking that interest rates will rise but believes it will not happen until the middle of May.

"Only a minority of analysts is expecting a move before May but, at the time of writing, the market was pricing approximately a 35% chance of a 25 point hike next week and a 100% chance of a move on or before the interim OCR review on 17 April," the bank says.

"Market pricing has become more aggressive on the back of the strong run of global data and, more importantly, continued evidence of a buoyant domestic economy."

There have been a number of recent factors putting pressure on interest rates including strong retail sales in January, a rebound in job ads in February and improving tourist numbers.

Deutsche Bank says there has also been record inward migration, which continues to put pressure on the housing market.

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