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HOME owners could face another interest rate rise next week after data showed a massive surge in job vacancies and credit growth above the Reserve Bank's comfort zone. Job vacancies rose 41.4 per cent in annual terms and 6.2per cent for February, according to Australian Bureau of Statistics figures released yesterday. And separate credit data from the Reserve Bank shows annual growth of 12.9per cent, above the bank's favoured 11per cent. Housing lending grew by 1per cent in February to an annual rate of 14per cent. Personal credit was up 1.1per cent for the month, and 15.5per cent for the year. Business lending also hit a seven-year annual high of 10.5per cent. Many market economists are now tipping that the Reserve could lift rates by another quarter of a percentage point when it meets on Tuesday. This would follow a rise of 25 basis points in early March, which lifted the official cash rate to 5.5per cent. "The data has tilted the odds more towards an interest rate hike next week," TD Securities chief strategist Stephen Koukoulas said yesterday. "The RBA is likely to be at least a little perturbed by the ongoing resilience in credit growth and the massive strength in job vacancies, which suggests ongoing demand for labour and possible wages pressure." But CommSec chief analyst Craig James said the bank could hold its fire until next month, given that retail petrol prices were at record highs and there was continuing uncertainty over the direction of house prices. Another rise would increase pressure on the Howard Government, which is under attack over skills shortages and capacity constraints that are prompting the central bank to tighten monetary policy. Yesterday's fresh round of interest rate speculation came as Treasury played down concern that Australian households were borrowing to live well beyond their means. While the Reserve Bank warned only last week that Australian households were potentially vulnerable because of over-borrowing, Treasury has given a much more upbeat assessment to a parliamentary inquiry into household debt, the demand for imported goods and the current account deficit. "There is, so far, little evidence that households as a whole have become over-extended in terms of debt," Treasury told the inquiry. "Furthermore, the Reserve Bank is aware that households now have more debt; it recognises that it needs smaller changes in interest rates to achieve a given effect on household spending." |
