Fed: Risk of rate rise grows as consumers go on shopping spree

AAP General News (Australia)
04-02-2007
Fed: Risk of rate rise grows as consumers go on shopping spree

CANBERRA, April 2 AAP - The chance of another interest rate gained ground today after
two sets of government data showed last year's rate rises have done little to restrain
consumer activity in the economy, and risks refuelling inflation pressures.

Australian Bureau of Statistics (ABS) data shows retail trade rose by a seasonally
adjusted 0.9 per cent in February to $18.795 billion from an upwardly revised $18.624
billion in January.

Economists had expected retail trade to rise 0.4 per cent.

At the same time, the ABS said building approvals surged by 10.6 per cent in February
when economists had expected a 1.0 per cent increase.

The Reserve Bank of Australia (RBA) holds its monthly board meeting tomorrow.

Before the data only a minority of economists expected the central bank would raise
rates as early as this week given the surprising strength of the economy since the start
of the year.

Others, however, while seeing a high risk of another interest rate this year, expect
the RBA will want to see the first quarter consumer price index later this month before
making a decision.

Still, the TD Securities-Melbourne Institute monthly inflation gauge released earlier
today showed consumer prices rose 0.5 per cent in March, to be 3.5 per cent higher than
a year earlier and compared with the RBA's 2-3 per cent inflation target.

AAP cb/sb/sco/de

KEYWORD: ECONOMY

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