RBA retains interest rate

INTEREST rates may rise another 0.25 per cent before coming down.

The Reserve Bank of Australia’s governors decided to keep the official interest rate at 6.25 per cent at their meeting on Tuesday.

Chamber of Commerce and Industry economist Nicky Cusworth said the RBA’s decision was a pleasant surprise.

“However, we’ll still have to watch for a rise in the underlying inflation rate which will make the RBA more likely to raise rates again,” Ms Cusworth said.

BankWest senior economist Alan Langford said the September 3 Australian Bureau of Statistics’ Retail Trade Figures release probably gave the RBA enough reason to not raise rates.

While retail sales were up 5.6 per cent in August after July’s post-GST 8.9 per cent slump, building approvals were at their lowest level in 17 years.

Mr Langford expects rates could rise another 0.25 per cent in November but thinks the rate cycle is close to its peak.