RBA to hold interest rates steady in April - economists

RATES likely to stay at 4pc in April due to uncertainty over housing lending, economists say.

Economists believe the Reserve Bank will hold interest rates steady in April / File

THE central bank is likely to keep interest rates on hold in April due to uncertainty surrounding the most recent housing lending figures, economists say.

Minutes from the March Reserve Bank board meeting reveal that central bankers decided to increase the cash rate to 4 per cent in early March in response to two months of data suggesting the economy might be growing at or close to trend.

But board members expressed concern that the fallout from the Greek financial crisis might have implications for the Australian economy, the minutes of the RBA's March 2 board meeting say.

"I certainly don't think there's any indication in these minutes that they'll move in April," ICAP senior economist Adam Carr said.

"Given the sharp drop in home lending I almost certainly think they won't move in April."

Australian housing finance commitments for owner-occupied housing fell 7.9 per cent in January, seasonally adjusted, to 51,056, the Australian Bureau of Statistics (ABS) said last week.

Economists had expected the number of owner-occupier housing finance commitments to have risen by 2.0 per cent in January.

Mr Carr said at its last meeting the RBA noted that home lending had only slowed a little.

"That was prior to the home lending data and as we've subsequently seen there's been a very sharp drop and I think that will be enough to spook them and certainly it should spook everyone."

He said the home lending data, to the extent that it is accurate, suggested a slower pace of monetary tightening is required.

"Certainly the RBA can sit back for a month to see what's going on."

He said the rest of the RBA minutes were "bullish" on domestic growth, with question marks still hanging over the US and the UK.

"But they don't think the issues, particularly the fiscal issues in Europe, warrant a pausing at this stage because they're of the opinion that we're not going to see a marked slowing of global growth as a result of those issues."