Domestically, a rebalancing in demand, from public to private spending, was starting to take place; the outlook for business investment was particularly strong. Employment was growing very quickly, unemployment had fallen back to just above 5 per cent, and inflation was forecast to reach the top end of the target range over the subsequent couple of years.
The Board’s assessment of these circumstances was that, if they continued and the economic outlook evolved as expected, there would be a case to raise interest rates a little at some point. However, the uncertainty in global markets, due to the spread of sovereign debt concerns beyond Greece, was seen as posing downside risks to the global economy, and consequently to Australia.