While the consensus among economists appears to be that interest rates will increase by another 1-1.5% over the next year or so, the Reserve Bank’s decision to leave the cash rate at 4.5% today was sensible, given the uncertainty out there in the economy.

The economic news hasn’t been good for Queensland in recent days.  Today we recorded another monthly decline (for the fourth consecutive month) in building approvals, a leading indicator of activity.  Partly this is a natural response to the artificially high building approvals that were induced by the Commonwealth’s temporary boost to the first home owners grant.  But given some signs of softness in retail trade (Retailers slash prices to stay afloat in tough times) and tourism, we will have to keep a close eye on the health of the Queensland economy over the coming months.