Inflation rise to put more pressure on interest rates
21 December 2007
Treasury forecasts for inflation to continually rise in 2008 will see home loan interest rates reach 9% in 2008.
The official cash rate is currently at 6.75 percent but is expected to rise to 7 percent at the next Reserve Bank of Australia (RBA) board meeting in February.
New Treasurer Mr Wayne Swan said, "I warn you we face an extended period of elevated inflation," in his speech to the Australian Industry Group last week, after being advised by Treasury officials that the inflation rate would continue to put pressure on interest rates over the next 18 months.
This will result in rising home loan interest rates putting pessure on households who have borrowed to the max during the boom housing period.
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