The Reserve Bank is trying to convince us that it is serious about another rate rise, but it is just as reluctant not to pull the trigger because of the weak state of large parts of the domestic economy.
In fact you could say the defining change from these June minutes from those in May and April is the growing reservations the RBA board have about the non-mining parts of the economy which are showing signs of stress and weakness.
In fact the timing of another interest rate rise is even harder to forecast after the release of the minutes of the Reserve Bank’s June 7 board meeting yesterday.
That’s what the bank wants to see because it knows another rate rise would be very damaging to those weak sectors in the non-mining parts of the economy, such as retailing, building and construction and non-resource investment.
The use of the word "prudent" in the minutes for the first time for some while, underlines this uncertainty at the central bank.
Market analysts picked up on this section in the minutes which wasn’t in the June 7 post meeting statement from Governor Glenn Stevens.
"Accordingly, members judged that it would be prudent to leave the stance of policy unchanged (my emphasis), pending further data on international developments and on the strength of domestic demand and inflationary pressures. They therefore considered that the current monetary policy setting was appropriate."
And why was it prudent, well the bank concedes that the data flow since the May 3 meeting hasn’t been all that strong.
Retail sales rose sharply in April, but there have been two weak jobs reports for April and May, home building is weak, car sales have fallen, house prices have weakened as have business and consumer confidence.
And the news from offshore, specifically Europe and the US, hasn’t been positive.
But while the use of the word "prudent" is a change from the minutes from previous meetings, it must be pointed out that in October 2009 the central bank and the governor said it would be "prudent’ to lift rates: that was the first increase in rates since the RBA started hacking them lower late in 2008 as the GFC hit. The cash rate was raised from 3% to 3.25% on October 6.
So while the use of the world prudent in the Minutes of the June 7 meeting is important as a qualifier, as a sign that the bank knows it has to wait and watch domestic non-mining activity.
In doing that, the bank is keeping the market and analysts sufficiently off balance so that a rate rise cannot be built into current expectations.
"Considerations for Monetary Policy show us how the bank has become more concerned about what is happening away from mining and resources.
"Members considered that the medium-term outlook for the economy was broadly as discussed at the May meeting.
"While inflation was currently in the bottom half of the target range in underlying terms, this had been partly due to the disinflationary effects of the appreciation of the exchange rate and the earlier moderation in labour costs.
"If the economy evolved in line with the staff forecasts, GDP growth would be somewhat above trend over the next few years, led by growth in the resources sector.
"A gradual pick-up in inflation could be expected under this scenario.
"This outlook suggested that further tightening in monetary policy would be necessary at some point.
"Members considered, however, that the flow of data over the past month had not added any urgency to the need for an adjustment to policy.
"While there had been additional evidence of the coming strong pick-up in investment in the resources sector, activity remained quite subdued in some other important parts of the economy, partly reflecting the Board’s earlier actions as well as the appreciation of the exchange rate.
"Credit growth remained quite moderate and asset prices had softened.
"In addition, the global activity data had been somewhat softer and downside risks to the international economy had become a little more prominent over the past month, especially in the case of sovereign debt problems in Europe.
"Accordingly, members judged that it would be prudent to leave the stance of policy unchanged, pending further data on international developments and on the strength of domestic demand and inflationary pressures. (My Emphasis)
"They