The Minutes from the RBA's March 2011 meeting are now adding to speculation that the next official GDP reading could be negative.
Flooding in Queensland and Victoria would likely take around 0.5 percentage points off GDP growth in each of the December and March quarters, but RBA said it would look beyond the short-term effect of the flooding. The economy appeared to be broadly growing at close to trend rate and the outlook for inflation in the year ahead was consistent with the bank's 2 per cent to 3 per cent medium-term target.
So the RBA left its cash rate target on hold at 4.75 per cent at the meeting.
Members confirmed that the Board's approach would be to look through temporary effects caused by extreme weather events and to continue to set monetary policy based on the medium-term outlook for growth and inflation.
The Reserve Bank believes that home loan rates are above average but the policy is mildly restrictive so that means that interest rates are certainly on hold for the foreseeable future and some economists believe perhaps until the end of the year.