RBA yay or nay? Does it really matter?

All eyes in Australia are focussed on the RBA's decison on interest rates tomorrow. About half the nations economists believe the RBA will raise rates 0.25% to 6.5%. In the last few weeks there has been ample evidence to support the case for a rise. Strong retail sales figures for February, housing approvals up 10% and inflation on the increase.

The market of course will take any rate rise negatively. Traditional logic tells us that higher interest rates make equities less attractive and cash more attractive. However rising interest rates also tell us something about the state of the economy. Indeed in Australia we have a tight labour market, high levels of business investment and robust consumer spending. Corporate profits for the year to June 30 will be strong. The housing market is showing signs of a turnaround or is it a false start?

But does any of this really matter? So what if the housing market has made a false start or the US or Chinese economy implodes tomorrow. If you are invested in excellent businesses with strong economics and have purchased them at reasonable prices what have you got to worry about? Precisely nothing, leave the short term guessing game to the speculators and be safe in the knowledge that you have invested intelligently.