Businesses are benefiting from the "Turnbull effect" but that won't necessarily stand in the way of an interest rate cut when the Reserve Bank holds its Melbourne Cup day board meeting.
Commonwealth Securities chief economist Craig James believes a decision by the central bank at its monthly meeting to cut the cash rate to a record low of 1.75 per cent is "finely balanced".
He said if major banks hadn't raised their mortgage rate to cover the cost of new prudential rules, the RBA would have had an easy decision to leave rates on hold.
"We believe that the Reserve Bank will wait a little longer to evaluate the impact of major bank increases in home loan rates," Mr James said.
The cash rate has stood at two per cent since May.
There was a smattering of new data before Tuesday's rate decision.
The Australian Chamber of Commerce and Industry business expectations survey for the September quarter - the first since Malcolm Turnbull became prime minister - found views on the economy improving for the first time in two years.
"We are starting to see the Turnbull effect filter through to business confidence, but what businesses really want to see is progress on the important problems facing Australia," the chamber's chief executive Kate Carnell said.
She says the challenge for the government is to boost growth through a more efficient tax system, a more flexible set of workplace regulations and a better process for selecting and funding public infrastructure.
The monthly TD Securities-Melbourne Institute inflation gauge also showed benign price pressures, remaining unchanged in October for an annual rate of 1.8 per cent and comfortably below the RBA's two to three per cent target band.
The result was in line with last week's official inflation figures for the September quarter, which had fuelled talk of an imminent rate cut.
"We do not see that as a trigger for a cut just now, but allows for such a move down the track if other sectors of the economy deteriorate," TD Securities chief Asia-Pacific strategist Annette Beacher said.
Other figures showed growth in city house prices slowing and a further sign that residential construction had passed its peak.
The manufacturing sector also saw some easing in momentum after its longest expansion in five years.
"There is clearly scope for stimulatory measures to boost domestic activity," Australian Industry Group boss Innes Willox said.
