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After a false start in October, NAB still expects the RBA to lift rates before Christmas.
According to the bank’s chief economist Alan Oster, the RBA will most likely raise the official cash rate 25 basis points in November – depending on the labour market and CPI figures due out later this month.
In addition to a rate hike this year, Mr Oster said he expects to see the RBA lift rates by 100 basis points in 2011, with the cash rate expected to hit 5.5 per cent by the September quarter.
“Rates are then likely to stay at this level given the strength of demand and tightness in labour market,” Mr Oster said.
“We also expect core inflation to sit at 2.8 per cent by the end of 2010 and 2.75 per cent by end 2011.”