“It’s extraordinary out there,” reported one of Henry’s economist mates.

Said mate had just been visiting the economic hot spots in the north and the west of this wide brown — correction, saturated — land.

“There’s a real boomtime mentality out there. Yet inflation has not risen. Any other time in Australia’s history the economy by now would be in deep trouble. The difference is immigration and Work Choices.”

This bloke had not yet read Henry’s advice to the board of the Reserve Bank, but has got his gaze firmly fixed on the main issue.

Yesterday there was another weak retail sales outcome, and this will have given the RBA board support for its fence sitting exercise on interest rates.

The Oz reported a leaked Treasury document on the growing burden on those wishing to buy a house:

The federal Treasury has warned of further interest rate rises and growing mortgage pressure on middle Australia, in a pre-election challenge to the Howard Government.

The same article quoted Treasury Secretary Dr. Ken Henry as saying the coverage was “simply outrageous”.

The inference about rate hikes by Channel Seven (the recipient of the leak) “appeared to be based on a sentence that said: ‘Movements in official interest rates are likely to change the debt-servicing burden of borrowers’.”

Dr Henry commented: “It is absurd to interpret this sentence as saying anything at all about the probability of future interest rate changes.”

Henry (Thornton, not Dr. Ken) thinks this strongly supports the majority (indeed, almost unanimous) view there will be no rate hike today. Pity really. And the RBA confirmed this inference at 9.30am today.

Read more at Henry Thornton.