International uncertainties and domestic risks suggest a need to cut by 25 basis points

But this aside, low global inflation and a rising Australian dollar meant so-called tradeable goods inflation was especially low, in a number of cases negative.

Low or negative inflation was sufficient to mask a noticeable increase in "non-tradeable" goods.

"Non-tradeables" inflation (home-made inflation) rose by 1 per cent in the quarter, or 3.6 per cent over the year.

Areas that experienced price rises were education, up by 6 per cent in the quarter (with a 7.7 per cent rise in secondary-school prices); recreational, sporting and cultural services 2 per cent; veterinary and pet services 1.1 per cent; health 4.4 per cent (due to Pharmaceutical Benefits changes); utilities 2.1 per cent (including electricity up by 3 per cent); rents 1 per cent; petrol 2.5 per cent; and urban transport fares 4.6 per cent.

Home-made inflation was sufficient in the March quarter to keep average prices rising despite the welcome traded goods deflation, reinforced by a rising dollar, which, of course, is falling already, and this may increase with a rate cut today and if the promised budget deficit is credible.

The big swing factor is the investment boom already under way, but this is predicated on continued strong commodity prices, and one assumes falls seen already in commodity prices are properly factored into the mining companies' plans.

Chinese economic growth has slowed to a mere 8 per cent annual rate and there is general belief that China's growth is unlikely to dip further, but I am less certain than most about this matter.

China's inflation reached a recent peak of more than 5 per cent, then fell and most recently has revived somewhat.

China's leaders may feel cheaper commodities would be a suitable reward from a more subdued economy and if that is the case, the froth will come off Australia's mining boom.

For some months the US recovery seemed to be stronger than expected and corporate results surprised on the upside, yet the latest jobs figures suggest at least a stumble in recovery and the US Federal Reserve has warned of a slow recovery.

The global benefit of this is that US interest rates should be lower for longer.

US Fed chairman Ben Bernanke has reiterated his position that US cash rates are likely to remain at about zero until late 2014.