Dubai debt crisis could delay rate rise

Dubai's debt crisis may have frightened the Reserve Bank of Australia (RBA) into holding off an interest rate hike.

The RBA meets tomorrow to discuss the prospect, but some economists believe the board will need to examine the repercussions of the crisis before it makes any changes.

Dubai World announced it would defer interest payments on $US59 bn of liabilities last week - a move that worried investors.

The news from Dubai reduced the odds of a rate rise from 68% to 45%.

The RBA has said it needs to balance the recovery of the economy with inflation fears.

Should it raise rates tomorrow, it will be the third hike in a row.