The debt futures market says there is a less than 50 per cent chance the Reserve Bank of Australia (RBA) will raise interest rates against at its next opportunity.

And the next opportunity is two months from now, when the RBA’s board holds its next monetary policy meeting following the usual January hiatus.

Those odds suggest there will be long gap - three or even four months - between interest rate rises, after a rapid-fire three increases in three months of December, November and October.

But neither the state of the economy nor the RBA’s commentary suggest any reason to expect such a dramatic shift in the RBA’s approach.

The latest monetary tightening, the third consecutive move of a quarter of a percentage point, took the cash rate to 3.75 per cent on Tuesday.

The 3.0 per cent rate that applied from early April to early October this year was a response to dysfunction in global financial markets.

When the rate cuts began in September 2008, money markets were in such disarray that banks were not only reluctant to lend to their customers, they were reluctant to lend to each other.

And when that happens, it makes sense for central banks to do whatever it takes to stand between dysfunction and the chaos that seemed a genuine possibility.

But that threat has receded, and with has gone the need to keep the cash rate as low as it had been for half a century, hence the hikes in this and the previous two months.

The key question is why the RBA would decide not to jack up the cash rate in February and wait, as the futures market says it probably will, until March or even April before moving again.

It could be that the RBA is set to pause, but there seems to be no particular reason why it should suddenly shift back a gear at 3.75 per cent, which is still extraordinarily low by historical standards.

The key element of the RBA’s statement on Tuesday was probably the summary of the prospects for economic growth and inflation.

“The board’s assessment of the outlook remains much as in the November statement on monetary policy,” it said.

“Growth in 2010 is likely to be close to trend and inflation close to target.”

Those forecasts were built on the assumption that the cash rate would continued rising.

Until this year, the RBA had always assumed, for the basis of its forecasts, that the cash rate would not change over the forecast horizon.

This assumption was relaxed with the quarterly monetary statement in August, when the RBA acknowledged it was “not particularly realistic to assume that the cash rate remains at the historically low level of three per cent out to the end of 2011″.

The RBA based its August forecasts on the assumption of “a return towards a more normal setting of monetary policy over the forecast horizon”.

The departure from standard practice continued with the November statement on monetary policy, published three days after the November 3 rate rise, which employed “the technical assumption that the cash rate increases gradually”.

There is no reason to suspect that some time in the past month this assumption has suddenly been deemed unrealistic, especially given the RBA’s comment that the outlook remains much the same.

So the forecasts - growth close to trend and inflation close to target - are probably consistent with ongoing rises in the cash rate.

Given that, the most realistic scenario is one where the rate of ascent of the cash rate stays as is until either the economic outlook changes or a cash rate that might be described as “more normal” has been reached.

Neither of those conditions apply at the moment, meaning the next rate hike is most likely to be announced on February 2.

AAP