Full agenda at today's Reserve Bank board meeting; key focus on changed language in Glenn Stevens' post-decision statement

                                                                                Key words from Reserve Bank July statement  source: RBA

Today's meeting of the Reserve Bank board will be anything but a dull affair.

Since August last year when the cash rate was cut to the historic low of 2.5 per cent, RBA watchers have quipped about quick decisions and an early lunch.

But on this first Tuesday of the month, it's unlikely that RBA board members will find themselves enjoying a mid-morning stroll down Sydney's Martin's Place.

Listen to my preview from this morning's edition of AM.

While it's close to certain that the cash rate will be held steady, there'll be a full agenda given the improving face of Australia's economy.

Signs of rising inflation could put the RBA's inflation hawks on a war footing, given that the headline figure in the most recent quarter was back up to 3 per cent annualised - right at the top of the RBA's target zone of 2 to 3 per cent.

And expectations that the official jobless rate looks set to remain at 6 per cent will have some members thinking the worst might have passed.

We'll know for sure that the Bureau of Statistics reveals the closely-watched result for July on Thursday.

The momentum towards a "glass half full" economy is underscored by positive private data out yesterday on inflation and jobs, capped off by a surprisingly strong 0.6 per cent increase in July retail sales.

However, the elephant in the RBA boardroom this morning remains Sydney's booming property market and rising concerns that a dangerous property bubble is building.

So yesterday's warning from former RBA board member Professor Warwick McKibbin might well be resonating this morning - that the cash rate has been kept too low for too long.

Economists and other RBA observers will be scrutinising the statement from governor Glenn Stevens when the outcome is revelealed this afternoon at 2.30 (eastern).

Tea leave readers will be looking for any changed language, subtle or otherwise, that could be seen as a the beginning of the RBA's "softening up" process for an eventual rate rise.

All eyes will be on the key final paragraphs that have led many (including this reporter) to read such statements backwards, aware that the lead can often be buried.

The last statement in July ended with the assuring words for some that "on present indications, the most prudent course is likely to be a period of stability in interest rates."

A removal of that statement, or a subtle rewording, will have market economists on rate rise alert or at the very least debating just when the hard decision will be made.

A shift in language could and force the Australian dollar higher although it is now clear the RBA believes it has used all levers to tame the still bullish currency.

While the Reserve Bank is selective about considering private data, today's meeting coincides with the release of Dun & Bradstreet's business expectations survey which only adds to the optimism.

The survey says nearly half the businesses surveyed are expecting increased activity in the coming months and that the outlook for sales is at its highest level in more than a decade.

So it appears that the initial hostile reception to the Federal Budget appears to be fading with businesses and consumers in a much more positive mood and willing to hire and spend.

The Australian economy remains fragile in some quarters, but a global shock aside, the Reserve Bank has little choice but to start sending the message that the recent period of low rates and cheap money for borrowers is about to end.