OCR: The clues an interest rate hike could be on the way

The Reserve Bank is unlikely to say when it’s expecting to raise interest rates ahead of time, an economist says, but there will be clues to look out for.

The bank’s latest monetary policy statement will be released on Wednesday, ahead of next month’s decision on the official cash rate (OCR). The OCR has been a record low for the past year, stimulating borrowing and spending to keep the economy ticking over during the biggest economic shock in a generation, if not longer.

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But with an economy that’s “reasonably fired up” and unemployment trending downwards, economist Cameron Bagrie says the bank will be starting to think about raising the OCR again, to keep inflation in check.

“They’ll want to be pretty patient, but slowly but surely all the pieces are falling into place for interest rates to move up and some stage down the track – with an emphasis here on ‘some stage down the track’,” he told The AM Show on Tuesday.