Australia unlikely to cut interest rate next year

Australian economists have predicted that the central bank is likely to keep the cash rate on hold in December and the chances of rate cuts in the coming year are slim as the nation's economy strengthens, local media reported on Friday.

All 14 economists surveyed by the Australian Associated Press ( AAP) agree the Reserve Bank of Australia (RBA) will not cut the cash rate at its December board meeting on Tuesday and just eight of those surveyed expect a rate cut in 2014.

They believe the non-mining sector will pick up its growth pace over the coming year with a more important role to play in the Australian economy.

"The RBA's previous assessment that the influence of previous interest rate cuts working through the economy still holds true and there is data to show that domestic expenditure is slowly improving," Citigroup economist Paul Brennan told AAP.

"Housing and equity markets and measures of sentiment have either remained largely stable or strengthened further."

Brennan said official figures for the September quarter capital expenditure (capex) showed mining investment would remain strong for a while.

"Mining capex plans are not falling off a cliff while the capex plans of non-mining companies are starting to firm," he said.

Global banking giant HSBC chief economist Paul Bloxham said mineral exports and housing are expected to become the main drivers for the Australian economy in 2014 as low interest rates continue to provide support.

"The recent pickup in consumer confidence is expected to translate into a modest pickup in household consumption."