On the back of the RBA minutes of the last board meeting, which raised rates by 25 bp to 4.00%, interest rates market are less confident of another on April 6.

The minutes show that Guvnor Glenn and his merry men have continued concerns over risks presented to the Euro area financial stability by the Grecian situation, but I dare say that these concerns should have lessened somewhat since the meeting on 2 March.

Internationally, US recovery signals are mixed, Europe is still sick as, but Asia is the great hope.

Personally, I remain concerned that this is the only comment around China:

There had been a relatively limited amount of new data for China. However, there was continuing evidence of strength in bank lending and asset markets, with property prices rising strongly in many cities.

You mean you believe the data?

Political sensitivity no doubt precludes any more robust commentary about the potential downside in a Chinese slowdown.

Domestically, confidence abounds but follow through (with exception of the miners) is limited:

Surveys showed business confidence and hiring plans to be relatively high, but also suggested a degree of caution in many businesses’ investment plans

Household surveys suggested that households were fairly confident overall about the future but (like businesses) were somewhat cautious in their views about spending.

Interestingly, construction strength doesn’t get the mention that it got in February’s Statement on Monetary Policy and the weak last housing finance figures would have given cause for thought.

And the best they could say about business credit was that

Members noted that the contraction in business credit had slowed noticeably.

But the evidence pointed to growth coming through, indeed a touch stronger than expected, with the labour market firming and, while inflation remained muted

On balance, members concluded that the evidence that had become available recently had confirmed that it remained appropriate for interest rates to move gradually towards normal levels, and that it was timely to take another step in that direction.

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The key word here is “gradually”.

Translation: “let’s skip next month – no need to rush things, boys”.

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Tags: rba minutes

This entry was posted on Tuesday, March 16th, 2010 at 1:49 pm and is filed under cash rate, monetary policy statement, rba. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.