As we said in Monday's Air, the outlook for interest rates will proceed according to a fixed timetable, with the first items happening yesterday with the minutes of the July 6 RBA board meeting and a speech by Governor Glenn Stevens leaving us a bit better informed.

The minutes show the centrality of inflation to the RBA's thinking and make clear that it will lift rates at its August 3 meeting if inflation shows signs of getting out of hand when the consumer price inflation figures are published on July 28.

That however is not confirmation that the bank will lift rates, it is still very uncertain.

But RBA Governor, Glenn Stevens said at a lunch in Sydney yesterday, after he had made the keynote speech that the RBA will do its job.

"The board will meet (on August 3), it will consider all the issues for the economy and do its job,'' Mr Stevens said in Sydney.

What else would people expect?

Earlier the Minutes of the July 6 board meeting, when the bank sat on rates for a second successive month, made it clear that the inflation outlook, followed by events offshore, were the current drivers for monetary policy.

Offshore, the most immediate hurdle as the results of the stress tests of the financial health of 91 leading European banks.

The results are out Friday night, our time. Most banks are expected to pass, which will lift confidence.

Bloomberg reported yesterday that one bank may fail, the now German government-controlled Hypo Real Estate, which has cost the Government more than 100 billion euros so far to bailout.

Other banks are said to be OK, but we won't know until Friday evening, or early Saturday morning if the results come after trading.

But Australian inflation is the key for the RBA, and it knows there will be a high reading for the June quarter.

"CPI inflation was, however, expected to rise to a little above 3 per cent, partly due to the effects of higher taxes on tobacco. Measures of inflation expectations had eased a little over the past month," the minutes said.

They finished with this paragraph:

"Members noted that the coming month would see important announcements about the health of the European banking sector, which had the potential to have a significant impact on financial markets and global confidence.

"There would also be an updated reading on domestic prices.

"This was expected to show further moderation in the year-ended underlying rate, although underlying inflation was likely to remain in the top half of the target range over the period ahead.

"Headline inflation was expected to rise, owing to the effects of some tax increases, with the year-ended increase in the CPI rising above 3 per cent.

"The important question for the Board at its next meeting would be whether the new information materially changed the medium-term outlook for inflation.

"Pending this information, the Board judged it appropriate to hold the cash rate unchanged."

The CPI in for the March quarter showed a rise of 0.9%, for an annual headline rate of 2.9%.

The RBA's underlying measures, the trimmed mean and weighted median, showed rises at an annual rate of 3.0% and 3.1% respectively in the March quarter.

The bank has shown in the past that it is prepared to cop a higher than target rate of inflation on a headline basis for a while, and on its preferred measures for a bit less, not it doesn't always react instinctively and push up rates when the lurch above the 3% top of the target level.

Of course a rate rise would be unsettling for Prime Minister Gillard and her Labor Party, and sweet justice for the liberals after bank shoved rates up in the 2007 campaign.

And if rates rise, the Government can blame the mostly state Labor Governments, especially in NSW, Victoria and Queensland where power, transport, water and sewerage charges are rising faster than inflation and have been for much of the past year.