26 May 2010

Inflation expectations starting to rise - Reserve Bank survey

6:50 am on 26 May 2010

The Reserve Bank's latest survey of companies shows their inflation expectations are continuing to edge up.

The bank's survey shows business managers expect annual inflation to average 2.8% over the next two years, slightly up on the 2.7% recorded in the previous survey.

The survey also shows companies expect inflation to average 2.9% over the coming year, a jump from the 2.1% in the March survey.

Respondents also expect stronger economic growth. They are picking the economy will expand 2.7% over the next 12 months, and 2.8% over two years.

Most economists expect the Reserve Bank will start raising interest rates from its current level of 2.5% from next month. The Official Cash Rate was set at that level on 30 April, 2009.