Rates should remain on hold for more than a year, NAB has predicted.
Following lower-than-expected inflation figures, the bank has revised its interest rate forecast. Originally calling for a Reserve Bank hike in May, NAB has now predicted any rise would be pushed back until November 2012. NAB also revised downward its inflationary forecasts, and said it expected core inflation to remain between 2.5-2.75% until 2013.
"This is much softer than our previous forecasts, which showed the core inflation rate accelerating to the top of the target band by the end of 2011 and remaining elevated for the remainder of the forecast horizon," the bank said in a statement.
NAB has still predicted a further cash rate move by the RBA, saying they anticipate a 25bp rise to 5% in November. However, Westpac economist Bill Evans has disagreed. Evans has predicted that rising unemployment, a slow housing market and global economic pressures will see the RBA cut rates by 25bps in December of this year.
