Third rate rise may not be far off

A flurry of robust economic data out over the last week further shows why the Reserve Bank (RBA) decided to put up interest rates in August and suggests that the earlier May rate rise had little effect on consumers. Another may not be far off, but it won't be as soon as this Wednesday. The RBA's credit figures were strong, showing that borrowing for housing slipped back to more modest levels of 1.1 per cent growth in July. But that nevertheless still leaves the annual rate of growth in home financing at 14 per cent and rising, levels that the RBA would consider a little too warm for comfort. Personal credit growth, too, was above 1 per cent for the month with overall credit growth approaching an annual growth rate of 15 per cent. We would want to see the combined effects of two rate rises paring these credit numbers back or the RBA will be itching to pull the interest rate trigger again this year. Meanwhile, new capital spending rose 1.1 per cent in the June quarter, not huge, but it takes the annual rate of business capital investment to 18 per cent - record levels. Retail trade rose 0.6 per cent in July lifting annual growth to 6.2 per cent and construction work completed in the June quarter beat expectations to rise 3.6 per cent. Along with the jobs market still apparently going gangbusters, it all paints a picture of an economy outperforming and no real let up yet in sight for inflation. That means a third interest rate rise might not be far away. It won't come in the September meeting on Wednesday but hold your breath for the June quarter economic growth figures out the same day, the next big test for interest rates.