This time the market (and the economic experts) got it right – Governor Glenn decided that 2 months break from rate rises was enough.

The first couple of sentences of the Guv’s statement made you wonder if some marbles have been lost somewhere

The global economy is growing, and world GDP is expected to rise at close to trend pace in 2010 and 2011. The expansion is still hesitant in the major countries, due to the continuing legacy of the financial crisis, resulting in ongoing excess capacity.

until you come to the third sentence which basically says that Asia will do the growth business, thank you very much.

In Asia, where financial sectors are not impaired, growth has continued to be quite strong.

But then he says

The authorities in some (Asian) countries are now seeking to reduce the degree of stimulus to their economies.

At the end of all that, I am not sure which way the world is going, which is probably right.

The domestic situation is a bit easier to read.

The Guv is seeing

signs that the process of business sector de-leveraging is moderating, with the pace of decline in business credit lessening and indications that lenders are starting to become more willing to lend to some borrowers.

He and his merry men seem comfortable with the state of the housing market and inflation, and so, because

Interest rates to most borrowers nonetheless remain lower than average. The Board judges that with growth likely to be close to trend and inflation close to target over the coming year, it is appropriate for interest rates to be closer to average. Today’s decision is a further step in that process.

Whether that average will end up being closer to 4.50 or 5.50% is the real end game.

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