ECONOMISTS appear split on whether the Reserve Bank will lift the cash rate for the first time in six months next Tuesday.
An AAP survey of 11 economists shows five believe the RBA will leave the cash rate at 4.5 per cent after its regular monthly board meeting on Tuesday, while six say the bank will lift the rate to 4.75 per cent.
But all of the analysts surveyed acknowledge the RBA's decision on Melbourne Cup day is still anybody's guess.
"I don't think anybody can call what a committee will decide on the day," AMP Capital Investors senior economist Bob Cunneen said.
"From here on it's a month to month proposition (on) what the RBA will do."
Market speculation about an impending rate rise shifted dramatically down gear early this week, after the publication of softer than expected inflation numbers for the September quarter.
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The central bank's stated mission is to keep inflation within a target of two to three per cent over the medium term.
Australian Bureau of Statistics (ABS) figures released on Wednesday put the underlying rate of inflation at 2.4 per cent year on year, while the headline rate was at 2.8 per cent in the quarter.
But Nomura Australia chief economist Stephen Roberts said some components of the ABS inflation data could give the RBA reason to raise the cash rate on Tuesday.
Housing costs rose by 2.3 per cent in the quarter, the data showed, with water and sewerage up 12.8 per cent, electricity up six per cent, and property rates and charges up 6.2 per cent.
"So even though the CPI (inflation data) was low, it was a very mixed CPI in its components," Mr Roberts said.
"The (RBA) have to be pre-emptive about inflation and they have to move ahead of it before it becomes a problem."
Mr Roberts said if the RBA chooses to leave the cash rate steady in November, it would leave them in a tight bind for December.
"December is an unusual month," he said.
"It doesn't have the same impact as going now. If the economy does start to accelerate, you have the chance to follow up in December before you go into that January break before the February meeting."
Traditionally the RBA board doesn't meet in January and usually makes its first rate decision of the new year in February.
The economy has accelerated over the previous six quarters while unemployment has fallen from its global financial crisis peak of 5.8 per cent to 5.1 per cent.
That hasn't yet caused inflation to pick up.
But it might, says St George Bank chief economist Justin Smirk.
"There's an oncoming boom coming in," he said.
"It's a once in a 100 years income kick that is helping to build domestic inflationary pressures, so clearly there is a rate rise coming.
"The RBA has a little bit of time on its hands just to assess how these effects are working, and while the boom is yet still to come, it has still to fade through."
He also noted the strong Australian dollar, which two weeks ago broke parity with the US dollar for the first time in 28 years, was having a dampening effect on exports.
The household sector was also feeling the effects of six rate rises between October last year and May 2010 that saw the rate move from three per cent to its current 4.5 per cent.
At rate rise of 25 basis points on Tuesday will add about $50 to the monthly repayments on a 25-year, $300,000 mortgage.
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