We got the predictable analysis yesterday of the minutes of the latest Reserve Bank board meeting, but little insight.
In fact few analysts managed to point out that the minutes were for a meeting that happened before the surprise 0.5% fall in March retail sales, the 22,000 fall in jobs in April and the fall in housing finance approvals to a decade low in March.
Some pointed out there was a similarity in the key phrase on rates in the minutes and the Statement of Monetary Policy issued three days later.
"Members judged that if economic conditions continued to evolve as expected, higher interest rates were likely to be required at some point if inflation was to remain consistent with the medium-term target," the RBA minutes said.
While the May 6 statement on monetary policy said "further tightening of monetary policy is likely to be required at some point for inflation to stay consistent with the two to three per cent medium term target".
But that was the RBA repeating in the Monetary Policy Statement what had been drafted in the minutes earlier that week.
The MPS and the minutes were based on the new lower forecasts for growth and higher inflation for the next year to 18 months.
I wonder what the minutes would have said if the falls in retail sales, jobs and housing approvals had been known?
Well, we will know in mid-June when the minutes of the next meeting on June 7 are released.
Before that meeting we have a speech on Thursday week, May 26, from RBA Deputy Governor Ric Battellino and one on June 15 from Governor Glenn Stevens.
Both are likely to address inflation and the patchy economy in their comments.
The key part of the RBA minutes was, as usual, the discussion towards the end of the monetary policy decision (to increase rates or leave them on hold).
"Members noted that the data becoming available for Australia were being significantly affected by earlier floods and Cyclone Yasi.
"The inflation rate had been boosted by a large increase in fruit and vegetable prices, and it was quite likely that GDP would be shown as having contracted in the March quarter because of the disruption to production in the mining sector.
"As discussed at the previous meeting, members remained of the view that it was appropriate to look through the temporary effects on inflation and growth and to set policy based on the medium-term outlook.
"Recent data confirmed above-trend growth in the world economy, which was boosting commodity prices. In turn, this was supporting real incomes in Australia and leading to very high levels of investment in the resources sector.
"The outlook for economic activity remained largely unchanged.
"While there were many uncertainties about the world economic outlook, the central scenario was for a continuation of above-trend growth.
"Growth in Australia was expected to be relatively strong over the next few years, with the unemployment rate moving lower.
"The recent CPI outcome had been higher than expected, although this followed an unusually low figure in the preceding quarter.
"While underlying inflation was currently in the lower half of the target band, it looked to have troughed and was expected to increase, over time, from there.
"The recent appreciation of the exchange rate and a continuation of the relatively high saving ratio by households would help to contain some of the inflationary pressures coming from the resources boom.
"Nonetheless, the staff forecast was for underlying inflation to be in the top part of the target band over the next couple of years and, based on the interest rate path implicit in recent financial market pricing, above 3 per cent towards the end of the forecast period.
"Members viewed the current mildly restrictive stance of monetary policy as remaining appropriate; with recent rises in the exchange rate likely to have further tightened conditions, particularly in some sectors of the economy.
"Members noted that the significant divergences between different sectors of the economy presented challenges for policy-making, but that monetary policy had to be set for the needs of the overall economy.
"In this respect, members judged that if economic conditions continued to evolve as expected, higher interest rates were likely to be required at some point if inflation was to remain consistent with the medium-term target.
"Members agreed to continue to assess carefully the evolving outlook for growth and inflation at future meetings."
In other words nothing has changed, but a rate rise is out there, lurking.
