By Robert Carry

Australia's financial markets have responded to yesterday's comments by Reserve Bank of Australia (RBA) chief Glenn Stevens, in which he said there was a need to return interest rates to more "normal" levels, by predicting six further .25% hikes before June 2010.

 Speaking at a breakfast meeting in Perth yesterday, Stevens suggested that further hikes might follow last week's increase which lifted the cash rate to 3.25% from 3%. According to The Age Newspaper, Stevens' comments have prompted financial markets to tip seven interest rate rises in a row.

If the predictions are proved correct, the cost of servicing a $275,000 mortgage would increase by $335 per month when set against the 3% interest rate seen before last week's rate rise.


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