THE Dublin money markets were yesterday indicating that there was no immediate pressure on retail interest rates, after Central Bank credit figures the previous day had raised some rate fears in the market. The key one-month rate remained unchanged yesterday at over 5.6 per cent.

While interest rates to borrowers are unlikely to rise again in the term, after the current round increases is over, the banks and societies could be pushed into small increase before the end of the year, if credit growth remains strong. The latest figures that private sector credit was at 13.7 per cent in July, up from an annual increase of 13.3 per cent the previous month and indicate that interest rates are set to under upward pressure in the months ahead. Residential mortgage lending was increasing by 16.1 percent, ahead of the 15.2 per cent rate shown in June.

The Central Bank is unlikely to be comfortable with credit expanding at this rate, fearing that it might feed through to inflation in the months ahead. However with the pound remaining firm on the currency markets and few signs of inflationary pressures elsewhere in the economy, the bank is likely to watch and wait for some time. International interest rate trends will also be important and while US interest rates may be set to rise, German rates are unlikely to start to move upwards until next year.

The bank may also feel that the interest rate increase now underway, while it may not have a major affect on borrowers' pockets, will at least have signalled that rates can rise as well as fall.

Competition in the lending market will also help to keep a lid on interest rates. Already the EBS Building Society has deferred its mortgage rate rise until the New Year and the fight for new business remains intense. This means that most of the financial institutions may be prepared to hold rates and see profit margins suffer, even if wholesale interest rates continue to edge up.