By Greg Peel

The last time the RBA made rate cuts at each of three consecutive meetings was in the wake of the GFC. Thus, perhaps, the simple question can be asked: is the situation now as dire as it was in 2008?

The answer would have to be "no", at least right now. With Europe the lingering issue one could never say never, but this time around it appears floods of central bank monetary stimulus across the globe are enough to consider another 2008 unlikely, even if recession is still a possibility. Having not met for two months, the tanned RBA board suggested via Glenn Stevens' statement that "The acute financial pressures on banks in Europe were alleviated considerably late in 2011 by the actions of policymakers". Things have changed since December.

In December, when the RBA last cut, fears over Europe had become heightened once more. With the cash rate then down to "neutral" by RBA standards at 4.5% the board decided easing local inflation provided scope to go one better down to "slightly accommodative" as a way to build a bit of a buffer against Europe. Three consecutive cuts are historically rare, and even two don't happen all that often. Given the time it takes for easier monetary policy to make its impression on the economy and resultant data, the RBA prefers to do things gradually and gauge the impact before moving again.

Developments in Europe since December, if one discounts for a moment the endless saga of Greek decision-making, have led to an easing of fear in the RBA's view, and the board notes an improvement in share markets as evidence. Locally, inflation is within target and should ease further and economic growth is about on trend with the terms of trade still providing strength. Clearly yesterday's weak retail sales data were not enough to tip the balance, and there is some offset when one considers the higher than expected trade surplus released last week. The economy varies "across sectors", as the RBA notes, but then the RBA only has one cash rate to control.

With the situation in Europe sufficiently under control for now, and interest rates for Australian borrowers being "close to their medium-term average", the board decided that 4.25% remained "appropriate" for now. The board will, of course, monitor developments closely.

Not all economists had considered a rate cut a given today, suggesting March was more likely, if there is to be one, as we await results in Europe and meanwhile witness improvement in the US and a soft landing in China. It really is a month by month proposition at present.

Read the full statement here.