Economists see cash rate at 3.25% in 2015

Economists predict a string of interest rate increases in 2015, with the cash rate expected to rise to 3.25%.

The board of the Reserve Bank of Australia meets this afternoon and none of the 13 market economists surveyed by AAP forecast any movement in the cash rate, or for the first half of 2014.

That's mostly due to indications from RBA governor Glenn Stevens in recent months that he is not inclined to cut the cash rate from its current record low 2.5%.

"On present indications, the most prudent course is likely to be a period of stability in interest rates," he said after both the February and March board meetings.

The RBA governor also increased expectations that the interest rate cutting cycle is over by delivering an upbeat view of the economy during a speech in Hong Kong last week.

Mr Stevens said there were "promising signs" from non-mining sectors of the Australian economy, where growth is needed to offset declining mining investment.

"There is encouraging early evidence that the so-called handover from mining-led demand growth to broader private demand growth is beginning," he said.

Four of the economists surveyed by AAP said the RBA's first rate hike in four years will occur in late 2014, and nine said there will be one or more increases in the first half of 2015.

Only two of the 13 economists surveyed say there will be another cut in the cash rate.

The median forecast for the cash rate at the end of 2015 is 3.25%.

Westpac economists, who typically forecast more rate cuts than other institutions, recently changed their predictions to no more cash rate cuts, after previously forecasting a cut in August and November.

Westpac chief economist Bill Evans said the economy was getting stronger, with the currently weak labour market expected to strengthen in 2015.

"The RBA board is pointing to gradual improvement in the economy, growth in 2015 being a little above trend; and inflation being contained," he said.

"Public comments from Reserve Bank officials and recent written commentary point to the bank having a high hurdle to cutting rates.

"The improved picture for the labour market and consumers has now, probably, made that hurdle just too high."

HSBC Australia chief economist Paul Bloxham is predicting the cash rate to start rising before the end of 2014.

"We expect the labour market to improve further from here," he said.

"Our view has been that the lift in activity indicators, which appears to have begun from September 2013, would start to feed through to a pick-up in employment, but that it would occur with a lag.

"With activity lifting, inflation already in the upper half of the target band and tentative signs that the labour market is also improving, we expect that the RBA's next move is likely to be up."