Businesses are enjoying their best trading conditions in over two years, but rising interest rates appear to have kept the lid on their demand for new finance.
Still, two of the nation's major banks expect the Reserve Bank of Australia (RBA) to lift the cash rate again in the near term, a prediction that is yet to be reflected in pricing on financial markets.
Westpac chief executive Gail Kelly expects another rate rise soon.
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"I expect that we will see possibly another interest rate rise over the next period of time, the foreseeable future, and then I think (the RBA) will pause for a while," Mrs Kelly told reporters after a Trans-Tasman Business Circle luncheon in Melbourne on Tuesday.
National Australia Bank chief economist Alan Oster expects a rate rise in May.
"While every RBA meeting is `potentially live' depending on data, we have pencilled in rate rises in May, August, September and December," Mr Oster said releasing his bank's latest business survey.
NAB jacked up its economic growth forecasts as its latest business survey showed forward orders at a six-year high and employment at a 28-month high.
And while business confidence eased slightly in March, it remained close to seven-year highs.
"Over the last two months ... activity seems to have accelerated sharply while confidence readings have bounced around but remained at very high levels," Mr Oster said.
The NAB business conditions index rose five points to 13 in March, with every sector reporting improving outcomes in the month.
Business confidence fell three points to 16 points in March.
NAB has raised its growth forecasts to 3.5 per cent from 3.0 per cent for 2010 and to 4.25 per cent from 4.0 per cent in 2011 based on a rising terms of trade, primarily from strong coal and iron ore prices.
Quarterly contract prices for iron ore and coal are expected to rise 115 per cent and 55 per cent respectively.
Add to that a strengthening labour market that could see unemployment drop to around 4.5 per cent by the end of 2010 and around four per cent by the end of 2011, compared to 5.3 per cent currently.
Still, other data released on Tuesday showed only a partial rebound in business credit demand.
Australian Bureau of Statistics' lending finance data showed that while commercial finance jumped by a seasonally adjusted 5.6 per cent to $28.1 billion in February, it followed a 7.1 per cent slump in January.
This is still only just over half of the $51.3 billion peak in commercial borrowings taken out in June 2007.
Lease finance rose 0.8 per cent to $365 million in March, but was still around 20 per cent lower than a year earlier.
Commonwealth Securities chief economist Craig James said recent data suggests the RBA can take a breather from raising interest rates.
"The Reserve Bank opts for the decision of least regret and arguably a decision to hold off on rate hikes for a month or two appears the best option at present," Mr James said.
