February interest rate hike unlikely after retail data

The Reserve Bank (RBA) has been tipped to keep interest rates on hold next month following the release of new data on the Australian economy.

Yesterday's (January 10th) figures on retail spending, construction and job advertisements all pointed to a slowdown in the Australian economy – trends that prompted the finance markets to forecast a 100 per cent probability that the official cash rate will be left at 4.75 per cent when the RBA's board meeting convenes on February 1st, the Courier-Mail reported .

Among the data, it was revealed that retail sales figures for November rose by just 0.3 per cent.

In addition, 2010 was recorded as seeing the two lowest year-on-year increases in retail spending since 2005.

Speaking to the newspaper, CommSec economist Savanth Sebastian suggested that the RBA would struggle to justify a rate hike before July if consumer spending remained so low.

"Rather it is more likely that retailers will need to continue discounting in coming months, especially given the economy was already struggling before the RBA delivered the November rate hike," he said.

This article is brought to you by Mozo – Helping you compare interest ratesADNFCR-1761-ID-800335775-ADNFCR