Interest rates

It is make or break time on whether there will be another interest rate rise, with Wednesday's Consumer Price Index figures likely to be the decisive factor in the Reserve Bank's decision on February 6.

Investors and economists are claiming it is a line-ball call and are hedging their bets about a 25 basis points rate hike to 6.5 per cent - its highest level in over a decade - until after the CPI announcement.

But if Reserve Bank of Australia governor Glenn Stevens does lift rates for a fourth time in less than 12 months, it is expected to add an extra $40 a month onto the average mortgage repayment on a $250,000 loan. This will push the average repayment up by about $160 a month within less than a year.

Prime Minister John Howard says the economy can handle another interst rate rise. Economists are unanimous in their view that the RBA will today decide to raise rates by 0.25 of a percentage point in an effort to keep a lid on inflation. Mr Howard says Australians should not be worried. "Once again, we've got to keep perspective," the prime minister told ABC radio. "Interest rates are still historically very low. They are much lower than they were previously."