Interest rate to rise three times in 2011

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A senior economist has predicted three rate rises for 2011, in spite of the RBA's decision on Tuesday to leave rates on hold.

Tim Crawford, senior analyst for Bankwest, has predicted the official cash rate will climb to 5.5% by the end of the year.

"Any time from April is possible," Crawford told the National Mortgage Brokers conference in Melbourne today.

According to Crawford, a robust labour market led by the continuing resources boom will put pressure on the central bank.

"We see a rising trend in interest rates in the longer term as the rest of the economy struggles to keep up with the resources sector," Crawford remarked.

In spite of the rise in rates, Crawford has a positive outlook for the housing market in 2011. He predicted that the rise in the labour market will lead to greater consumer confidence and more investment in the housing sector.

"When the housing sector has grown, it is always on the back of strong performance in the labour market," he said.

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