As forecasted by Capital Economics Ltd., with the end of this year, the price of the Australian Dollar would increase by 7%, as the country’s economy will grow rapidly and the rise in the interest rates has been triggered by inflationary conditions.

Sukhy Ubhi, international economist in London at Capital Economics expressed on Tuesday that the Australian Dollar will increase to 98 U. S. cents by the end of the current year, thanks to enhanced consumption in the second quarter and robust performance of retail sales in July.

Ubhi said, “An increase in inflation pressures from above-trend growth and tighter labor market conditions looks only a matter of time”.

Earlier today, Reserve Bank of Australia Governor, Glenn Stevens didn’t make any changes in the overnight cash rate target of 4.5% for the fourth month, which made the Aussie Dollar drop 0.9% to 90.95 U. S. cents. It remained leveled overnight and for most of the morning.

As per the economist, with the disclosure of the consumer price data in October, RBA will surge the rate by 25 basis points in its meeting to be held in November. He added that by the end of the year, the rate would reach to a threshold of 5.75%.