Australia's interest rates will remain on hold for the foreseeable future following the release of strong gross domestic product for the June quarter, market economists said. They said the second quarter data wiped any chance of near-term rate cuts but showed that while some interest rate sensitive sectors of the economy are lagging, other sectors are performing strongly, most notably the export focused resources sector. The figures released by the Australian Bureau of Statistics (ABS) showed GDP in the June quarter rose a seasonally adjusted 1.3 pct from the revised March quarter of 0.5 pct and above market expectations of 1.0 pct. The GDP data was up 2.6 pct year-on-year from 1.9 pct in the year to March. BT Financial chief economist Chris Caton said the strong data "should reduce the market's enthusiasm for a near-term rate cut". "The Australian economy grew well in June quarter, with growth coming in the right places, most notably business fixed investment," he said. New business investment rose by 6.8 pct in the June quarter, following a 1.6 pct fall in the March quarter, and rose 15.3 pct year-on-year. Machinery and equipment investment rose by 7.1 pct in the quarter, and by 18.3 pct in the past year, while non-dwelling construction rose by 8.4 pct to 14.5 pct for the year. However, he said concerns with the implicit deflator for GDP rising to 1.6 pct for the June quarter, and 4.6 pct annually, are not an issue. Caton points to the deflator for gross national expenditure rising only 0.5 pct in the quarter and 2.5 pct in the past year, and private consumption deflator rose by 0.4 pct or 1.8 pct in the past year. He said this is comparable to the consumer price index of 0.6 pct for the June quarter and 2.5 pct annually.