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NAB tipping rates to rise in next year

National Australia Bank Ltd chief economist Alan Oster is tipping interest rates will rise about one per cent during the next 12 months…

While the chance of the Reserve Bank of Australia (RBA) raising the official cash rate at a meeting on Tuesday was “zero”, Mr Oster said rises were ahead.

He told ABC TV that once consumers began to worry less about Europe's debt problems, the RBA would again start rate rises.

“We have a half a per cent towards the end of the year and another half maybe by about the middle of next year, so maybe about 100 points in total from here is still I think where we need to go,” Mr Oster said.

Mr Oster said rates were always likely to go above the current rate.

“I find it very hard to believe that a neutral rate has a four in front of it,” he said.

Mr Oster said Australia was at low risk unless there was a major problem in Europe of the United States.

“I think the risks, actually, in the medium term in Australia are on the upside,” he said.

SOURCE: aap