Australian Reserve Bank likely to lift rates

New inflation data reveal the moderation in prices has come to an end, suggesting the Australian Reserve Bank (RBA) will raise its cash rate for an unprecedented third month in a row.

The TD Securities-Melbourne Institute monthly inflation gauge released on Monday showed prices rose by 0.3 percent in October, lifting the annual rate to 2.1 percent.

The rate is just within the RBA's two to three percent inflation target band, after spending the prior six months well below it.

The central bank holds its monthly board meeting on Tuesday, when most market economists expect it to raise the cash rate by 25basis points to 3.75 percent.

TD Securities senior strategist Annette Beacher said the board would be weighing up the risks of raising the cash rate by too much, too early compared with the risks associated with leaving the cash rate too low for too long.

"To us, a cash rate of 3.5 percent is too accommodative for an economy clearly outperforming global peers, and prices appear to have stopped decelerating," Beacher said.

Contributing most to the increase in price rises were private motoring, fruit and vegetables, and household supplies.

These were partially offset by falls in prices for holiday travel and accommodation, and audio-visual and computing equipment.

Source: Xinhua