The cash rate remains at its near 50-year low of 3 per cent after the central bank's monthly board meeting. The outcome matched economists' expectations.

RBA Governor Glenn Stevens has highlighted in recent speeches the improving economies overseas and Australia's own milder-than-expected downturn. Most analysts now expect the next move in official rates to be higher with the main uncertainty being the timing of the rate increase.

Mr Stevens singled out extra spending by governments as behind the brighter prospects for growth.

''With considerable economic stimulus in train around the world, the global economy is stabilising after an earlier sharp contraction in demand,'' Mr Stevens said in a statement accompanying the rates verdict.

''Downside risks to the global outlook have diminished, though they have not disappeared and most observers expect only modest growth overall,'' he said.

Australia remains one of the few rich economies to have dodged two consecutive quarters of contraction, the widely used definition of recession.

Recent economic figures have mostly provided positive surprises for analysts. While retail sales data for June out today shrank 1.4 per cent when a 0.5 per cent expansion had been expected, turnover for the entire June quarter showed a better-than-tipped 2 per cent expansion. That increase alone may add 0.4 percentage points to the overall June quarter growth, economists estimate.

czappone@fairfax.c om.au

BusinessDay