Australia’s central bank leaves rates on hold

SYDNEY, Sept 5, 2007 (AFP) – Australia’s central bank Wednesday left interest rates on hold for another month despite building price pressures, but analysts said another rise by year-end remained on the cards. The government’s handling of the booming economy is seen as one of its top vote-winners, but high interest rates are likely to hit homeowners through the impact on mortgages. The Reserve Bank of Australia (RBA), which held its monthly meeting Tuesday to discuss monetary policy, left its official cash rate at 6.50 percent, following last month’s rate rise.

The decision was widely expected but economists have warned that another rate rise could be on the cards ahead of this year’s national election due to rising price pressures.

Stronger-than-expected June quarter national accounts have added to the rate rise momentum.

The central bank last raised interest rates by 25 basis points in August — its ninth rise since 2002, bringing them to their highest level in nearly 11 years.

The hike may hurt the government with an election expected within the next two months.

Prime Minister John Howard is yet to call the election but said this week it would be well before Christmas.

JPMorgan