6 Dec 2010

Interest rates predicted to stay on hold

6:32 am on 6 December 2010

The Reserve Bank makes its next interest rate decision on Thursday but most economists believe interest rates will be kept on hold until at least March.

Some think the central bank may hold off even longer, until at least June, as economic data in recent weeks points to an increasingly weak recovery.

Institute of Economic Research principal economist Shamubeel Eaqub is one of those picking a later rate rise.

He says the recovery is likely to remain slow and shallow for some time, and the Reserve Bank will need to give the economy more breathing space.

However, Westpac senior economist Dominick Stephens says the market has overeacted to some of the weak economic data in recent weeks, while business confidence has improved and net migration has surged. He says there's a better than 50% chance of a rate hike in March or April.