Fed: Interest rates to stay on hold

AAP General News (Australia)
08-04-2004
Fed: Interest rates to stay on hold

CANBERRA, Aug 4 AAP - Homebuyers have been spared higher mortgage repayments for at
least another month after the Reserve Bank left interest rates on hold in August.

The Reserve Bank announced this morning the official cash rate would remain at 5.25
per cent, where it has been since December.

The central bank lifted rates late last year in the face of a run-up in debt and house
prices, which have since showed signs of softening.

But strong consumer spending, a recovery in exports and low unemployment still indicate
another hike may still be on the cards later this year, although probably not until after
the federal election.

The announcement came as new figures showed the services sector bounced back in July
as new orders rose to the highest level since January.

Australian Industry Group/Commonwealth Bank services index jumped 5.2 points, with
seven of the nine sectors reporting an increase in activity, led by health and community
services.

A separate survey yesterday showed business confidence was at a nine-year high, although
it also picked up worrying signs of a rise in wage pressures, which could feed into inflation.

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KEYWORD: ECONOMY SECOND DAYLEAD

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