'Good dynamic for economy' could mean interest rate rise

The interest rate could be set to increase, according to one expert.

An interest rate rise could be on the cards for Australians, according to one industry expert.

James McIntyre, an economist for Commonwealth Bank – which offers Commonwealth credit cards - said he did not think the Reserve Bank of Australia (RBA) would be able to ignore a rise after looking at the state of the economy.

According to the Australian Associated Press (AAP), he said: "A strong labour market and very robust business expenditure are all adding up to a very good dynamic for the domestic economy."

The AAP surveyed 16 bank economists and 11 said they thought RBA would up the cash rate by 0.25 percentage points to four per cent at its meeting in Sydney next week.

The last increase came in October and the RBA decided to maintain its levels earlier this month but hinted at another rise if "economic conditions evolve broadly as expected".

An increase in interest rates would be bad news for people with credit card debt, but may be good news for those with savings accounts because they would get a better rate on what they have put away for a rainy day.

By Emma North