How high will interest rates go?

There maybe some relief in sight to the Reserve Banks determination to push interest rates ever higher as a means to curtail inflation, with the latest statistics showing a slowdown in consumer buying.

The most recent consumer price index figures prices increased by just 0.2 per cent during February, dragging the annual rate of inflation down to 6.8 per.

This is still a long way away from the Reserve Bank's preferred range of between 2 and 3 per cent for rising prices but we only need to have a few more months repeating the results that were achieved in February and we will be there.

Nothing though is certain in the economy. Inflation is still quite strong in the United States and their central bank is determined to bring it down this calendar year.

This will have a direct impact on Australian prices. Higher interest rates in the United States will mean a strong greenback and this will push the Australian dollar lower against it.

This in turn will make the price of  imported final goods or imported goods used here in Australia to make things, more expensive and this will push local prices higher as a result.

However, one bright light at the end of the tunnel is that some Australian banks are actually reducing the rates charged on longer term fixed home loans.

This means that all things considered, these banks are now expected rates to be lower in four to five years and not higher, which is a good thing.

It will give plenty of people who are doing it tough at the moment, trying to pay for ever higher housing and other living costs, a moment in time to re-group and behaves feel a bit more confident about the future.

.