It's that time of the month again . . . .

Last week saw the first Tuesday of the month, and we all know that that means, don' t we? Blood pressure was just a little bit higher as will was tension in the air. All because The Reserve Bank of Australia (RBA) sat down to look at whether or not they needed to lower or increase the target cash rate. At the start of May this year the RBA lowered the cash rate by 50 basis points (or half a percent) to 3.75%, this was mainly due to the fact that inflation (one of the RBA's goals) was at a low of 1.6%, rather than between 2-3% over the Business Cycle. This month they decided to again lower the rate but by 25 basis points taking the target cash rate to 3.5% This type of policy is called Monetary Policy and more so, either expansionary or contractionary policy depending on whether the change decreases or increases. In the current economic climate when the global outlook looking bleak, especially in Europe, the RBA will almost certainly look to either lower the cash rate or keep it the same in the months ahead. Expansionary Monetary Policy is used when the Unemployment is low, or inflation is too low, to try and stimulate the economy. It can be the consequence of a sick economy that the cash rate would be lowered dramatically to increase spending. Compared to our International Counterparts we are faring quite well, this can be seen by the fact that most other developed Countries went into a recession during the Global Financial Crisis (GFC) and we didn't, and the fact that last September, Mr. Wayne Swan won the award of World's Best Finance Minister, only the second Australian so to do. Economically, as a country are not doing so badly, however you would not get that from listening to the Leader of the Opposition nor the Shadow Treasurer. It will be interesting to see, what the RBA decides to do, in terms of increasing or decreasing the Target Cash Rate in the next few months because although the global outlook is still looking bleak the mining sector of our economy is firing away and in some instances might benefit from an increase in the cash rate rather than a decrease. So it is with anticipation that we wait for the next, first Tuesday of the month, to see what it will bring.