The Reserve Bank of Australia left the official cash rate at 4.75 per cent today as expected.
Reading through the accompanying statement, the board seems to suggest rates aren't moving anywhere anytime soon.
It notes that while the Queensland and Victorian floods are having a temporary adverse effect on economic activity and prices, the focus on monetary policy will remain on medium-term prospects for economic activity and inflation.
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That means the RBA is looking through the short-term economic impacts of the floods.
When we look to the medium term, there two things worth discussing. The first is of Australia's terms of trade, which are at their highest level since the early 1950s. The RBA also notes that national income is growing strongly. As a result, inflationary pressures may arise.
However, the RBA also said that it expects inflation over the year ahead to be consistent with its two to three per cent target band.
One of the main reasons the RBA moves on interest rates is to keep inflation in check, but at this point at least, it seems that consumer prices are certainly under control.
I've interviewed a number of economists in the lead up to this rates decision. Many say we still have at least one or two more interest rate rises this year, the first of which coming in the June Quarter.
It will be interesting to see over the next few days if economists revise their expectations for a rate rise to later in the year, or even into the next.
