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RBA minutes to flesh out rate thinking

 

The Reserve Bank will flesh out its latest interest rate deliberations when it releases the minutes of its April 3 board meeting on Tuesday.

That meeting again left the cash rate unchanged at a record low 1.5 per cent and where it has stood since August 2016.

Since the board meeting, governor Philip Lowe again warned the next move in the cash rate will likely be up, reflecting an improvement in the economy.

He told a conference in Perth last week while this may be a shock to some people as the last cash rate rise was seven years ago, an increase would likely come at a time when the economy is strengthening and wages are picking up.

Economists will be looking for an expanded discussion in the minutes over funding costs for the banks and whether this could mean a round of independent increases in lending rates in the future.

In Dr Lowe's statement that immediately followed the board meeting, he mentioned short-term interest rates are increasing in global markets beyond reflecting the recent rise in the US federal funds rate which has flowed through to other countries, including Australia.

However, it is questionable whether the major banks would be up to braving the wrath of the public over an independent rate rise while being investigated by a royal commission over their behaviour.

Such a move now would put more pressure on households which are already struggling with low wage growth, rising energy bills and high debt.

Such burdens have led to fickle consumer confidence, a pointer to future retail spending plans.

The weekly ANZ-Roy Morgan consumer confidence index is also due on Tuesday.

Last week the index fell for a third straight week to its lowest level since mid-December, undermined by recent volatility in share markets over rising trade tensions between China and the US.