The Reserve Bank is not worried about any short term impact on growth and inflation flowing from the impact of the floods in various states in the past few months.

In fact Governor Glenn Stevens went out of his way to detail the RBA's thinking on the floods and their possible impact in his first post board meeting statement of the year which also revealed that the cash rate had been left on hold at 4.75%.

The news saw the Australian dollar regain the $US1 parity level with the greenback.

The bottom line from the statement is: the RBA is more happy with the economy at the moment, especially inflation, expects the floods to have some impact, sees the rebuilding helping offset that early negative impact in future quarters, but is still concerned about the tight conditions for labour, materials and other resources as the commodities boom grows.

That decision was widely expected, especially after the better than forecast inflation figures for the December quarter, especially the underlying rate which fell to 2.25% in the three months to December while the headline rate was a touch lower at 2.7%.

That in turn seems to have helped the RBA become more confident about inflation for the remainder of this year (we will get the first new forecasts from the bank in the Statement of Monetary Policy on Friday).

"Inflation is consistent with the medium-term objective of monetary policy, having declined significantly from its peak in 2008. Recent data show underlying inflation at around 2