Interest rates may turn up
Economists are seeing more signs that monetary policy is gaining traction, but most view an interest rate change unlikely at the Reserve Bank's meeting on Tuesday.
But looking further ahead, some economists are predicting the RBA could begin to lift interest rates as early as October.
HSBC chief economist Paul Bloxham said optimism about China's future growth and recent improvements to the labour market meant the need for easing was over.
"Clearly, the market still believes cuts are more likely than hikes but, in our view, much of this reflects downside global risks, rather than local developments," he said.
"Consumer sentiment and the housing market are improving in large part due to low interest rates. The next move may be up, and we have pencilled in the next hike for Q4 this year."
Credit Suisse data suggests the official cash rate will stay on hold at 3 per cent, with the market giving an 8 per cent chance of a downward move of 25 basis points.
Citi economists Josh Williamson and Paul Brennan said the main development since the last RBA meeting was the escalation of the crisis in Cyprus, which was unlikely to influence domestic policy. "The global backdrop doesn't present a case for further near-term policy easing," they said. "Inflation outlook still leaves the door open to one more interest rate cut, but the window is closing."
The TD Securities Melbourne Institute monthly inflation gauge increased by just 0.2 per cent in March, for a 2.1 per cent annual pace, following a flat monthly result in February. It is the lowest annual inflation outcome in eight months, raising expectations of another interest rate cut before the end of the financial year.
ABS job vacancy data was also week, falling 10.1 per cent over the three months to February. Although a sharp decline, ANZ economists said the fall represented some "catch-up".