The Reserve Bank of Australia's next move will be largely dependent on the Financial Stability Review (FSR) on Thursday.

While the build-up in inflationary pressure from the recovering economy and the re-emergence of the minerals boom would have resulted in more interest rate hikes than we have seen so far, recent announcements that rates have been left on hold have typically included a reference to the ongoing fragility of the world's financial system.

The Reserve Bank of Australia in August, for instance, cited financial conditions such as turmoil centred on Greece's government debt blowout, to back its move to keep the official cash rate at 4.5 per cent.

''Financial markets are functioning more smoothly than they were a few months ago, though caution persists'', according to the minutes of the central bank's September 7 meeting, which also said the board's members ''were briefed on the Bank's half-yearly assessment of the financial system''.

The RBA also said the Australian financial system was still ''significantly stronger'' than those of most other nations and the exposures of Australian banks to the economies in the euro area under fiscal strain were ''small''.

This suggests that the hurdle between the Reserve Bank and the next rate hike is getting easier to clear. The FSR, which will go into more detail on Thursday, is expected to be in the same vein.