Rates tipped to stay on hold
Rates tipped to stay on hold

The Reserve Bank is poised to leave interest rates on hold today after brighter economic data emerged from China and the US.

The Reserve has official interest rates at 3.25 per cent and a Melbourne Cup day quarter percentage point cut, put at a 50-50 chance by analysts and financial markets, would take them to where they were at the depths of the global financial crisis.

"International developments" largely drove last month's cut.

Since then it appears China has arrested its slowdown with improvements in the manufacturing sector. Iron ore prices are also up about 15 per cent.

The US looks to be emerging from its prolonged downturn, with last weekend's positive jobs figures coming on top of growing consumer confidence and lifting house prices.

Domestically, mixed signals continue. Last month's retail trade figures, released yesterday, show total turnover up 0.5 per cent nationally and by 1.2 per cent in WA.

But inflation-adjusted figures show a fall of 0.1 per cent across retailing.

Car sales, which are not part of the retail sales figures, grew one per cent last month to be 10 per cent higher than a year ago.

The Federal Chamber of Automotive Industries reported WA sales were up almost 9 per cent in the 10 months to October 31 compared with last year. The jobs market continues to be soft. The ANZ's measure of job advertisements fell another 4.6 per cent last month, its seventh consecutive monthly decline.

Job advertisements are 15 per cent lower than a year ago and in WA they are down more than 36 per cent on October last year.

Westpac chief executive Gail Kelly said if the Reserve did not cut today then it move in December.

The figures came as Opposition Leader Tony Abbott accused the Federal Government of putting upward pressure on interest rates.

"If the Reserve Bank cuts rates, that won't be a sign of Australia's economic strength, it will be a sign of general economic weakness," he said yesterday.

"Cutting interests rates at the moment, sure, would be helpful but it would be a sign of the bank's fundamental angst about the local and international economy.

"A Government which is paying $20 million a day in interest on what it has borrowed is inevitably putting pressure on interest rates."

Prime Minister Julia Gillard, in Laos for an Asia-Europe summit, said Mr Abbott's comments showed he did not understand the economy and were ridiculous and offensive.

'Cutting interest rates will be a sign of general economic weakness.'" Opposition Leader *Tony Abbott *

The West Australian

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