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Wider bank margins will limit rate hikes over 2010 according to AMP chief economist Shane Oliver.
In the latest economic up-date Dr Oliver has forecast that the cash rate will peak at 4.75 per cent in the year ahead.
December saw most banks move above the cash rate with Westpac pushing its rates by the largest margin with a 20 basis point increase.
Last week ANZ and CBA warned that 2010 will bring further rises in lending rates as a result of the Australian Prudential Regulation Authority’s (APRA) proposed alteration of liquidity rules, now due by June 2011.
