WEEKEND ECONOMIST: Set to move

Not only is the RBA almost certain to hike rates next week, but the central bank is also likely to move very quickly towards the 'neutral' target level of 4.25 per cent.

In last week's note we strongly reconfirmed our view that the RBA would raise rates by 25 basis points on February 2. We argued that the CPI would be largely irrelevant to the decision.

Our view remains that the Bank is planning to move the cash rate back to the "neutral" target level of 4.5 per cent by June at the latest with the first move of 25 basis points coming next week.

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