Federal Finance Minister Lindsay Tanner has suggested that rumours of a 50 basis-point hike by the RBA next week may be premature in an interview today (Thursday). However, he added that the ‘emergency’ cash rate was not likely to be around for too long.

Expectations are for a further rate rise by the Reserve Bank of Australia on Melbourne Cup day, but economists are hedging their bets as to whether it will be a 0.25 per cent hike or a 0.50 per cent rise. Inflation data this week did come in slightly above expectations but not high enough that it would cause alarm for the central bank. As such, it could be recent deterioration on stock markets that compels the RBA to be a little cautious, something that would likely be welcomed by Mr Tanner.

“There’s always speculation of this kind,” Mr Tanner told ABC Radio. “You’re just as likely to find in tomorrow’s newspapers there’ll be speculation in the opposite direction because there’s been a bad set of numbers from the United States or there’s queries over China or something like that.”

However, he was quick to point out that the Federal Government would not be putting any pressure on the RBA.

“The Reserve Bank, and the government as well, have indicated that clearly it is unrealistic to expect interest rates to stay at those emergency lows forever, or for a lengthy period of time, but ultimately that is a decision for the Reserve Bank,” Mr Tanner concluded.