Share prices were sliding and the dollar was jumping higher on Tuesday afternoon as investors threw a tantrum over the Reserve Bank's decision to leave its cash rate unchanged, but they and the markets should calm down fairly quickly.
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There was an "either-or" hint that this would happen in the minutes of the Reserve's previous meeting, on February 3.
Those minutes were released two weeks after the meeting and revealed that the central bank's board heard updates on the economy, decided that a rate cut was worth doing, and then discussed when the cut should occur.
"In deciding the timing of such a change, members assessed arguments for acting at this meeting or at the following meeting," the February minutes state, before adding that the decision was to cut immediately, from 2.5 per cent to 2.25 per cent.
That was a pretty clear hint that cuts in both months were not being contemplated.
Data on the economy has been mixed since then and there is still concern that another rate cut would fan investor demand for housing that is pushing up on prices, in Sydney in particular.
The February rate cut has also not yet fed into the economy significantly.
Given that, a decision to sit and wait is hardly surprising. The Reserve has also gone out the way in its latest decision to let the markets know that it can cut again if necessary.
It is "appropriate to hold interest rates steady for the time being," Tuesday's March meeting announcement says, but "further easing of policy may be appropriate over the period ahead, in order to foster sustainable growth in demand and inflation consistent with the target."
That doesn't materially move the dial, on the $A or shares.
Rates could go down later, and in my opinion, will. They just aren't going down as quickly as some in the markets want.
