Rates on hold as RBA waits

The Reserve Bank left interest rates on hold for October as expected amid conflicting economic signs about where the economy is headed over the next few months. Building approvals fell sharply in August mainly on the back of a big 37 per cent fall in the volatile apartment construction segment which makes it hard to discern the trend. Approvals overall are still higher than they were last year but it seems it is the renovation market adding the most to the building industry with approvals for additions and alterations up 18 per cent on last year. Retail sales rose a fairly modest 0.3 per cent in August but the overall trend shows sales holding up well in recent months in the face of two interest rate rises and high petrol prices. Now that petrol is coming down, the combination with low unemployment should mean spending remains healthy in coming months. Are we passing the peak in inflationary pressures on the economy as petrol prices come down, jobs growth expectations level off and the US economy slows? If so, another interest rate rise may not be needed this year but there can be no certainty of that yet.