There is a strong case for United States Federal Reserve officials to lift interest rates when they meet next month, Craigs Investment Partners Chris Timms said yesterday.
The rate rise could come as long as US economic data did not disappoint.
San Francisco federal president John Williams said the recent data had been encouraging, especially on the labour market.
Assuming the good run of data continued, there was confidence inflation would move back to 2%.
The Fed had kept its interest rate close to zero for nine years.
Mr Timms said the Fed was widely seen increasing its benchmark overnight interest rate at its December 15-16 policy meeting and the debate now was already shifting to the pace of rate hikes in the future.
The rate hikes would not only be gradual, but would not follow the stair-step pattern characterising the Fed's last policy-tightening cycle when it raised rates by 0.25% at every meeting.
''I do think the slope is the most important thing to communicate.''
The Fed's quarterly economic forecasts would be critical, along with public comment from Fed officials and possible changes to the Fed's post-meeting statement, Mr Timms said.
Across the Tasman, the Australian dollar was higher yesterday, getting support from expectations the Reserve Bank of Australia would not be cutting the cash rate below 2%.
OM Financial senior client adviser Stuart Ive said it was strange the Aussie was higher.
''At the end of the day, it stems from the fact the RBA is firmly on the fence in terms of monetary policy.
''There was a heightened expectation of a rate cut after the local banks put up their lending rates but that didn't materialise.''
Mr Ive did not expect the Aussie to rise any further. If the Fed did raise its interest rate in December, he expected the Aussie to fall to around US70c.
HSBC Australia-New Zealand chief economist Paul Bloxham said November's RBA decision to hold rates steady, despite significant downward revisions to the central bank's own inflation forecasts, suggested considerable reluctance to cut further.
On the RBA's own forecasts, growth was not expected to get back to trend until late 2016 and the unemployment rate was expected to stay high for the next two years.
''If the RBA believed that a further cut would create more growth and jobs, and not lead to other unwanted problems, it would surely have delivered looser policy.''
The RBA was forecasting underlying inflation to skirt the bottom edge of the target band and saw a 50% chance it would fall below the band in coming quarters, he said.
It seemed the central bank thought the costs of cutting further outweighed the benefits.
''This begs the question: has Australia's conventional monetary policy reached its useful limits?''
