Rate rise coming next week

The Reserve Bank will almost certainly raise official interest rates at the RBA board meeting in Sydney next week.

In recent weeks, both the governor Glenn Stevens and his deputy Ric Battellino have hinted that rates will rise next month. The RBA believes it has to move rates back to a neutral setting, which is thought to be about five per cent, through the course of 2010.

The bank believes that Chinese demand will continue to provide growth in the Australian economy.