The Federal Reserve has always waited at least 12 months after unemployment peaked before increasing the official cash rate, according to Paul Mortimer-Lee. As unemployment has not peaked yet, the official cash rate will probably stay at 0.25 per cent during 2010, he told BusinessDay.

It normally took 12 to 20 months for increased consumer spending to start putting pressure on inflation, he said. The Fed confirmed on November 4 that it was unlikely to raise interest rates for some time.

The Australian dollar hit US93c several times last week and is expected to reach parity in coming months, before declining to about US85c.

Mr Mortimer-Lee's forecast has implications for the dollar, because global demand for the Australian currency will decrease as soon as bankers think the Fed is going to start raising US rates.

At present Australian dollar-denominated investments are in high demand because high interest rates here give better returns than US dollar, sterling or yen-denominated investments.

According to data compiled by Bloomberg, analysts do not expect the Federal Reserve to increase the cash rate until September 2010.

Australia's official cash rate, however, is expected to keep increasing as unemployment appears to have peaked, and the Reserve Bank says it can no longer justify keeping the official cash rate at emergency low levels.

The three-month interbank lending rate was heading towards 4 per cent on Friday , which implies that the official cash rate would reach at least 3.75 per cent by mid-February.

And expectations of low rates in the US also have implications for global equity markets, said the managing director of the US-based SMH Capital Markets Group, Stephen Nash.

"There is $US3.3 trillion in US money market funds earning less than 1 per cent, down from $US3.9 trillion at the beginning of the year," Mr Nash said. Out of the $US600 billion which had entered investment markets, less than $US20 billion had gone into US equities, he said.