Two things stand out in the Reserve Bank of Australia’s (RBA) announcement of a rise in interest rates.

First, there are more to come.

And second, their timing is anyone’s guess.

Tuesday’s increase brought the cash rate to 4.0 per cent from 3.75 per cent.

It was given only a two-in-three chance by the futures market ahead of the RBA board’s monthly monetary policy meeting.

But the outlook always was that rates would rise, and more than once, this year, starting either this month or next.

The RBA confirmed the upward trajectory was intact.

In a statement announcing the move, RBA governor Glenn Stevens said lending rates remained relatively low.

The monetary stimulus employed to counter the crisis had been lessened, he said.

“Interest rates to most borrowers nonetheless remain lower than average.

“The Board judges that with growth likely to be close to trend and inflation close to target over the coming year, it is appropriate for interest rates to be closer to average.

“Today’s decision is a further step in that process,” Stevens said.

Since a key speech by RBA deputy governor Ric Battellino in December, it has been clear that “average” for interest rates does not imply a cash rate around 5.5 per cent, its average for the past 15 years.

Because spreads between cash and other rates have widened in the past couple of years, a cash rate consistent with other market rates near their average levels is now around one percentage point lower, at about 4.5 per cent.

An expectation that the cash rate will be pushed up that high, or even a bit higher, is plausible against the background of an economy already picking up momentum and facing the second coming of the China-led mining boom which will subject the economy to additional inflationary pressures.

But the timing is by no means clear.

Before the RBA’s decision and its clear pointer on Tuesday to further rises, the futures market’s best bet for the cash rate at the end of 2010 was 4.75 per cent.

It still is.

That implies three more increases of a quarter of a percentage point this year, the first in June or July, the second around September and the third in November or December.

Whether that schedule turns out to be accurate depends on how the economy stands up.

Unexpectedly faster growth in gross domestic product (GDP), above the “trend” pace of 3.25-2.5 per cent the RBA expects this year and next year would accelerate the rate hikes.

So would unexpectedly steep falls in unemployment and underlying inflation bottoming out higher than the expected 2.5 per cent.

Unexpected weakness in those measures would allow the RBA to tread more gently.

But even assuming the RBA’s forecasts pan out in line with expectations there is no guarantee the futures market has got it right.

It might have.

It might also be wrong - it could reasonably be argued that the RBA is looking to get the cash rate up to 4.75 per cent by June or, conversely, to leave it on hold until October.

Economists will be looking closely at RBA speeches, reports and announcements - including the minutes to Tuesday’s meeting, to be released on March 16 - for any scraps of information that might help to fill the information vacuum.

AAP