Rate rise becoming hard to avoid

Debate continues as to how close the Reserve Bank is to raising interest rates again. Whatever the RBA board thinks now, the release of the next inflation figures late this month holds the key to its May deliberations.

In the meantime, ongoing strong jobs growth continues to underpin the economy with a buoyancy that means inflationary pressures aren't going away. The monthly job figures have been historically notoriously volatile, bouncing around from month to month. But over the last year in particular, very clear trends have emerged. Job numbers are going up and up and unemployment is going down and down.

March saw another 10,000 new jobs added in all with the unemployment rate falling to 4.5 per cent, although this was partly due to a drop in the participation rate. A quarter of a million jobs have been added in the last year.

While employment moves from strength to strength, home borrowing looks like it's turning around to better times. Owner-occupied borrowing continues its upward turn in February. The number of loan commitments, excluding refinancing, increased by 1.5 per cent. The numbers are up more strongly in investment loans as investors eye the rental housing shortage and skyrocketing rents.

Across the loans market, lending for owner occupied housing rose by almost 1 per cent, personal lending rose 0.4 per cent and business lending saw enormous jumps – 15.6 per cent in commercial loans, 24.1 per cent in lease finance.

All in all, it's hard to see that the three interest rate rises last year have had more than a temporary effect on economic activity. With the economy seemingly in for a strong year at a time when inflation is only just in check, it would seem a further rise in interest rates is not far away.