Rate cuts providing a boost, says RBA

Australian homeowners are unlikely to get further interest rate relief unless the global economy takes a turn for the worse.

Economists say the minutes of the Reserve Bank of Australia's August 7 board meeting suggest interest rate cuts are off the agenda in the short term. The minutes, released yesterday, show that positive signs in the Australian and Chinese economies contributed to the RBA's decision to keep the cash rate on hold at 3.5 per cent.

Economic growth appeared to be stabilising in China - Australia's biggest trading partner - while there were signs recent interest rate cuts were already providing a boost to the local economy, the RBA said.

Commonwealth Bank chief economist Michael Blythe said the RBA appeared to be more positive about the economic outlook and further interest rate cuts appeared unlikely.

However, the RBA had room to cut again if the global economy took a turn for the worse.

"There is still that big offshore uncertainty, which suggests that if they are going to change rates soon it's still more likely to be down than up," he said.

The RBA last cut the cash rate by a quarter of a percentage point in June, following a half a percentage point cut in May.

With the economy growing at around trend, JPMorgan Australia chief economist Stephen Walters said it would be hard to see the RBA cutting the cash rate again in the next few months.

He said it would probably take a combination of fresh signs of trouble in Europe's sovereign debt crisis, weaker domestic data and further rises in the Australian dollar to persuade the RBA to move again.

"I think you would need a combination of all three."

- AAP