Australia's policy tightening is not over, but will be slow

The Reserve Bank of Australia (RBA) held its cash rate at 4.75% today, as expected. Its commentary was unusually dovish. Nevertheless, above-trend GDP growth still looks likely in 2011-12, which means that the inflation threat will probably rise. We still forecast that the RBA will eventually lift its cash rate by another 100bp, although have adjusted the profile of the tightening to come. We now expect the next move to come in early April, rather than in February.