Reserve Bank still likely to hike rates | Latest news | News.com.au

THE Reserve Bank will not be deterred from lifting interest rates next week despite the latest inflation data showing some easing in price pressures, economists say.
But the impending hike is unlikely to be as large as 50 basis points, with the cash interest rate now forecast to lift to 3.50 per cent, from 3.25 per cent.

Australia's prices rose 1.3 per cent in the past year, down from 1.5 per cent in the year to June, official data shows.

It was the slowest annual pace for headline inflation since the June quarter of 1999, when it printed 1.1 per cent.

But quarterly inflation increased to one per cent in the three months to September, up from 0.5 per cent in the quarter to June.

Economists' forecasts had centred on an annual inflation rate of 1.2 per cent and a quarterly rate of 0.9 per cent.

Underlying inflation came in at 3.5 per cent for the year, which is still above the Reserve Bank's target range.

The market already expects The Reserve Bank to increase rates by 25 basis points next week.