RBA will increase cash rates 'only twice in 2010'

The Reserve Bank of Australia will raise cash rates twice in 2010, according an economist.

The Reserve Bank of Australia (RBA) will increase the cash rates twice this year, according to an industry expert.

Clifford Bennett, chief economist at Herston Economics, told the Australian Associated Press that interest rates would keep inflation in check, something which could appeal to credit card holders.

He said interest rates are at a "new normal" rate of around 3.5 per cent, in contrast to last year.

"In the first three rate hikes last year a lot of the (RBA) statements were around the discussion of how strong growth is going to be," he added.

During the financial crisis the cash rates rose by 75 basis points in the last quarter of 2009, which took the rate up to 3.75 per cent after a 49-year low of three per cent.

Mr Bennett's comments come as Citi predicted earlier this week that the RBA will boost rates to 5.25 per cent by the end of 2010.

By James Leyfield