Reserve Bank of Australia could hold interest rates until February

THE Reserve Bank could keep rates on hold until February amid fears the economy has finally run out of momentum.

Reserve Bank

THE Reserve Bank board has kept rates on hold at 4.75 per cent when it met today following the release of disappointing housing, retail and job figures.

The last rate rise was in November, and analysts predict it will be months before another spike occurs.

ANZ head of Australian economics and property research Ivan Colhoun said the bank did not anticipate rate rises before February.

And Westpac senior economist Matthew Hassan said his bank expected the next rate hike to be in the December quarter.

Job advertisements up

The prediction came after ANZ yesterday released job advertisements data for June, which found total job ads on the internet and in newspapers rose 3.7 per cent in June, but in trend terms ads fell by 0.8 per cent month-on-month.

"Declining trends in job advertising ... usually foreshadow lower interest rates," Mr Colhoun said.

Building and retail sectors down

CommSec economist Savanth Sebastian said retail and building approvals data would likely delay the next rate increase.

ABS figures also released yesterday show building approvals were down by 7.9 per cent nationally.

"It pretty well signals that the Australian economy has lost a lot of momentum," Mr Sebastian said.

The figures also reveal national retail sales fell 0.6 per cent to $20.61 billion in May following a rise of 1.2 per cent in April.

The biggest declines were in food, clothing and shoes, and household goods.

NSW (down 1.2 per cent) and Victoria (1.1 per cent) led the national decline.

Economists had forecast national retail sales to rise by 0.3 per cent.

Business SA chief executive Peter Vaughan said the retail figures were disappointing but not surprising.

"We have had a series of interest rate rises and business and consumer confidence is at very low levels," he said.

Australian National Retailers Association chief executive Margy Osmond said uncertainty about interest rates and a proposed carbon tax were keeping consumers out of the shops. 

Inflation back within target range

A private measure of inflation released yesterday showed consumer prices were unchanged in June, bringing inflation back within the bank's official target range.

The TD Securities-Melbourne Institute monthly inflation gauge was flat in June, after slowing to 0.2 per cent in May from 0.3 per cent in April.

Over the year to June, the indicator rose 2.9 per cent, in line with the two to three per cent medium-term target the RBA uses.

With the Adelaide Advertiser