The Reserve Bank of Australia may resume lifting the developed world’s highest borrowing costs in July or August to counter inflation fuelled by the biggest surge in demand since 2009, rates in money markets show.
Yields on July and August interbank cash rate futures advanced, extending last week’s first gain in a month. A June 1 gross domestic product report showed demand grew 1.3 per cent in the first quarter, more than twice as much as in the prior period. June contracts show traders are betting RBA Governor Glenn Stevens will leave the central bank’s target interest rate at 4.75 per cent tomorrow, where it’s been since November.
Household spending accounts for 55 per cent of Australia’s economy, and the central bank has sought to restrain consumption with 175 basis points of rate increases between October 2009 and November, letting investment in mining drive growth.
