24 Jul 2008

RBA tipped to raise interest rate

12:33 pm on 24 July 2008

There is renewed speculation that the Australian Reserve Bank will raise interest rates before Christmas. Inflation for the year to June is now 4.5%.

That's its highest annual pace in almost 17 years and has been attributed to higher prices for food, oil and rents.

Commonwealth Bank of Australia chief economist, Michael Blythe, says the Reserve Bank was expecting a high figure, but it's probably at the top end of its tolerance level.

He says the bank is likely to keep rates on hold at 7.25% for the next few months, but may still raise rates later this year.