The case for a higher cash rate is building and, on my assessment, it should be lifted within the next six months. Global growth is lifting, which is supporting commodity prices and boosting Australia’s national income. Conditions in the local economy have improved. Surveyed business conditions are around decade-highs, corporate profitability has picked up and so has jobs growth. Although underlying inflation is still below the bottom edge of the target band, the lift in growth should be expected to support a pick-up in underlying inflation over time and monetary policy should be set with the forecasts in mind. While the current highly accommodative cash rate setting was needed to assist the economy to rebalance after the end of the mining boom, the mining retreat is near its end. The low cash rate is also causing other challenges, by continuing to support housing price booms in Sydney and Melbourne. Although I recommend the cash rate is held steady this month, I can see a strong case for it needing to be lifted in the next six months.