Interest rates are at a 12-year high after the central bank increased rates twice this year because of concerns about inflation.

 

The Consumer Price Index is at the top of the Reserve Bank's target range and an unofficial measure of inflation yesterday was at a six-year high.

 

But JP Morgan senior economist Stephen Walters says a number of factors may convince the Reserve Bank board to keep rates on hold.

 

"The Reserve Bank has already raised interest rates three times in the past three months and of course the commercial banks have raised interest rates by more even than the Reserve Bank, so that means there is a lot of tightening in the pipeline already and I don't think we've seen the full impact of that yet, but also we've still got some instability in global credit markets," he said.

 

"Homeowners need to enjoy the relief they are going to get tomorrow because I think it's going to be short-lived."

 

Mr Walters says if the official inflation rate out in April is high, it is likely the central bank will lift rates in May.