The cash rate will remain at 4.50% after yesterday's board meeting. The language of the statement, and I've pasted the last three paragraphs below as they are very illuminating, suggests the next rate rise will be further away than their last statement indicated.
Concerns still remain about global growth, particularly from Europe and despite the strong contribution to Australian growth expected from the terms of trade the language seems to suggest they are reasonably relaxed about inflation.
"With the high level of the terms of trade expected to add to incomes and demand, output growth in Australia over the year ahead is likely to be about trend, even though the effects of earlier expansionary policy measures will be diminishing. Consumption spending is recording a modest increase at present, with households displaying a degree of caution, but most indicators suggest business investment will increase over the coming year. Business credit appears to have stabilised, though credit conditions for some sectors remain difficult. Credit outstanding for housing has continued to expand at a solid pace, but dwelling prices are rising more slowly than earlier in the year.
The labour market has continued to firm gradually, and after the significant decline last year, growth in wages has picked up a little, as had been expected. Underlying inflation appears likely to be in the upper half of the target zone over the next year. The rate of CPI increase is likely to be a little above 3 per cent in the near term, due to the effects of increases in tobacco taxes announced earlier in the year and significant increases in prices for utilities.
The current setting of monetary policy is resulting in interest rates to borrowers around their average levels of the past decade. Pending further information about international and local conditions for demand and prices, the Board views this setting of monetary policy as appropriate"
