Since then, signs of economic weakness have multiplied.
Retail sales suffered their biggest monthly fall in June for six years as consumer sentiment hit depths not seen since the recession of the early 1990s.
Crucially, borrowing by households and business has slumped as banks jacked up their lending rates while rationing credit. This extra market-driven tightening of financial conditions may have gone beyond what the RBA wanted.
"Financial conditions have tightened by more than the RBA planned or anticipated and the economic data is weak enough that the RBA will be worried about the risk of recession," argued Robertson at Macquarie.
A survey out early Tuesday illustrated how tough things had become in the services sector, which accounts for around two thirds of the economy.
The Australian Industry Group-Commonwealth Bank Performance of Services Index (PSI) fell 2.6 points in July to 42.8, well below the 50 level that separates contraction from expansion.
Perhaps most worrying was a sharp 6 point drop in the employment index to 42.2, a record low for the survey.
The labour market has been one of the most resilient parts of the economy and weakness here would greatly add to the case for early cuts in interest rates.
Official figures on employment for July are due on Thursday and analysts were already looking for only a marginal rise of 1,250 net new jobs in the month.
"If the unemployment rate starts to tick up, then we can expect the RBA to move sooner rather than later," said Su-Lin Ong, a senior economist at RBC Capital Markets.
"We are looking for a rate cut in early 2009, but there is clearly a risk it will happen in the last quarter of 2008."