The Australian dollar is going up against the US dollar, which has risen since the election of Donald Trump.
The Reserve Bank of Australia said it expected rates to rise by between 2 and 3 per cent this year.
The latest data comes after the RBA forecast a rise of 1.4 per cent to 1.5 per cent for the year.
It also pointed to an increase in loan-to-value (LTV) ratios, a measure of the value of a loan, with the RBS saying that “credit for value” (CNV) ratios are expected to be around 2 per cent by 2020.
It said the CNV ratio, which measures the number of outstanding loans, was expected to fall to 1 per cent in 2020.
The RBA also raised its interest rate forecast for the Australian economy to 0.5% by 2021.
“The rise in the RBNZ’s inflation expectations has also been offset by lower nominal GDP growth, which is expected to moderate in the first half of 2021,” the RBC said.
“While there is uncertainty around the timing of the tightening in inflation expectations, the RAB sees the downside risks to growth being reduced over the longer term.”
The RBS expects inflation to reach 2.0 per cent, the Bank of England is expecting inflation to rise to 2.5%, the Bank for International Settlements is forecasting inflation to fall by 1 per the first quarter of 2021.
The Australian dollar rose 0.9 per cent against the greenback to $US0.8976.
The Australian currency was up 0.7 per cent at 87.7 Australian cents.
The dollar was trading at 97.94 US cents in New York on Wednesday.