Australia unlikely to face another interest rate rise before March 2011

ANALYSTS are tipping Australia's economic inertia could delay the next interest rate rise until March or even April next year.

THE Australian economy is limping rather than hopping along, with some analysts tipping the inertia could delay the next interest rate rise until March or even April next year.

 Mixed but mostly sluggish data released by the Australian Bureau of Statistics yesterday convinced many economists to slice nearly half a per cent off their forecast growth for the year to November.

While building approvals firmed for the first time in seven months and housing prices were slightly up, private sector borrowing was still slack and the current account deficit widened beyond expectations.

At first blush, the jump in dwelling approvals for October of 9.3 per cent looked impressive but Commsec economist Savanth Sebastian warned the vast majority of projects captured by the statistic were in the highly volatile apartments sector, rather than the more reliable construction of stand-alone houses.

Mr Sebastian stuck to his analysis that the economy was still sluggish saying October's rise in building approvals needed to be put in the context of the 30 per cent decline of the past six months and the fact the Reserve Bank board's rate rise of last month had not been factored in.

"The RBA would be well aware that the forward looking data suggests that growth is likely to be subdued in the near term," Mr Sebastian said.

"Interest rates are likely to remain on hold for the next few months, to support investment and activity."

ANZ senior economist Katie Dean also told BusinessDaily the chances of a rate rise before April were remote, based on yesterday's data.

"There was nothing in the data that would provide any ammunition for the RBA to lift rates before at least the second quarter of next year," Ms Dean said.

National Australia Bank economist Alan Oster confirmed "the economy had come off the boil".

"It's possible to escape a rate rise in February and March ... it will all depend on what happens in the data over coming weeks," he said.

Likewise, the 0.3 per cent increase in October house prices posted yesterday was just further confirmation the market was "slowing at a controlled pace", according to RP Data-Rismark Hedonic Australian Home Value Index.