RBA leaves rates unchanged, BoE likely to hike tomorrow

Australia left interest rates unchanged today. Bloomberg reports:

Australia's central bank kept its benchmark interest rate unchanged for an eighth month as the fastest economic growth in three years is yet to stoke inflation.

Reserve Bank of Australia Governor Glenn Stevens and his board left the overnight cash rate target at 6.25 percent, a six-year high, today in Sydney. The decision was expected by 26 of 27 economists surveyed by Bloomberg News. One predicted an increase...

Reports yesterday showed retail sales fell 0.1 percent in May from April, the first back-to-back drop in more than seven years. Home-building approvals slumped 5.6 percent to a six-year low. The reports prompted traders to lower the odds of a rate increase this year.

Central bank watch now shifts to the UK, where the Bank of England is widely expected to raise rates on Thursday. Reuters reports:

British interest rates will go up this week if just one Bank of England policymaker switches sides and joins the minority who called for a hike last month.

Four Monetary Policy Committee members, including Governor Mervyn King, wanted to raise interest rates a quarter-point to 5.75 percent last month. They were outvoted by the other five -- only the second time the governor has been on the losing side.

But 56 out of 70 economists polled by Reuters last week reckoned that at least one of those who had wanted to hold rates at 5.5 percent in June just a month after the last quarter-point rise would be ready to hike on Thursday.

BoE members wishing to raise rates would probaby not be deterred by yesterday's economic data. Wage growth for permanent staff in Britain eased from a seven-year high in June but growth in the construction sector accelerated.