No rate rise from the Reserve Bank yesterday, and no signals for what might happen in future months, as we got from September 2009 to May of this year.

The first was not new news, the second point meant frustration for many market economists of the 'rate rise looms' variety after every RBA statement or comment or ABS statistic.

Compounding things for this section of the forecasting brigade yesterday were indifferent retail sales and weakening building approvals, both for June.

In both we are seeing the impact of the six rate rises from the RBA since last October and the increased caution among consumers.

The central bank wants the domestic side of the economy to run more slowly to relieve pressure on the strong resources sector where business investment is solid and forecast to rise strong this year and into 2012-13.

Later today we will get the trade figures for June and for 2009-10 which will illustrate quite nicely the other side of the RBA's dilemma.

Another big trade surplus is expected in June, and we can expect more in coming months, thanks to higher iron ore, coal and gas prices.

Wheat prices are surging globally (see separate story) and this could boost farm incomes in coming months if they persist at current two year highs or better.

The RBA has to balance this surge in export revenue and national income as our terms of trade hit record levels for the second time in two years, against inflation, wages growth and demand in the domestic economy.

That's why the subdued underlying inflation report for the June quarter was a godsend to the bank and to the economy.

With luck the slow growth in prices will persist through the rest of 2010 and allow the bank to leave rates on hold.

In the past fortnight, global economic conditions outside the US and Japan have improved.

The RBA Governor Glenn Stevens picked up on that improvement in yesterday's statement.

"The caution evident in financial markets in the past few months has abated of late, helped by the disclosure of information about European banks.

"Nonetheless, the global outlook remains somewhat more uncertain than a few months ago and this is reflected in the volatility of financial prices.

"Commodity prices are off their peaks but those most important for Australia remain at very high levels, and the terms of trade are around their peak of two years ago.

"With the high level of the terms of trade expected to add to incomes and demand, output growth in Australia over the year ahead is likely to be about trend, even though the effects of earlier expansionary policy measures will be diminishing.

"Consumption spending is recording a modest increase at present, with households displaying a degree of caution, but most indicators suggest business investment will increase over the coming year. Business credit has stabilised, though credit conditions for some sectors remain difficult.

"Credit outstanding for housing has continued to expand, but the upward pressure on dwelling prices appears to have abated.

"The labour market has continued to firm gradually, and after the significant decline last year, growth in wages has picked up a little, as had been expected.

"Recent data for inflation were consistent with the Bank's May forecasts, with underlying inflation declining to about 2¾ per cent, the lowest rate for about three years.

"The rate of CPI increase was a little above 3 per cent due to the effects of increases in tobacco taxes announced earlier in the year.

"Through to mid 2011, underlying inflation is likely to be in the top half of the target zone, while CPI inflation will probably be just above 3 per cent for a few quarters due to the impact of the tax changes and increases in utilities prices.

"The current setting of monetary policy is resulting in interest rates to borrowers around their average levels of the past decade.

"With growth likely to be close to trend, inflation close to target and the global outlook remaining somewhat uncertain, the Board judged this setting of monetary policy to be appropriate."

So when inflation moves above target, and/or the global outlook improves further, the bank will look at rates.

But don't dismiss the US economy's creaking slowdown replacing concern at the RBA about Europe at the head of offshore concerns for the bank.

That's why this Friday night's US jobs figures will be important to sentiment.

A bad jobs report and the rebound in US markets and commodity prices (but not wheat) will take a big hit.

A good report (and good is relative) and off markets will go again, with industrial commodities pushing higher as well.