The Australian economy is showing signs of growing at an acceptably firm pace over the medium term and with inflation starting to lift towards the RBA’s 2-3% target according to recent commentaries by the RBA including the speech given by Governor Philip Lowe yesterday. There are several key assessments and provisos with the RBA’s view relating to fading headwinds to economic growth from the terms of trade and falling mining investment spending and views that the decline in annual wages growth and inflation are almost over too. The strong inference in the RBA’s assessment is that the economy needs no more assistance from a lower cash rate. Apart from judging whether or not the RBA’s economic assessment is right one problem with the RBA leaving the cash rate on hold is that it may reinforce pressures that are working to tighten monetary conditions, something the economy does not need at this stage.