The Reserve Bank’s campaign to slow the economy by raising interest rates seems to be working a treat.

Retail sales have slowed, building approvals have topped out and are on the way down, and business confidence is continuing to fall, according to the latest survey from the National Australia Bank.

Tomorrow we will get the latest on consumer confidence when the latest Westpac/Melbourne Institute Survey is released. If the outlook continues to be gloomy, we could be reading “Rate cut looms, Tele triumph” on the front page of that shameful tabloid.

The NAB said in its March survey that the fall in business conditions confirms a significant easing in growth momentum to their lowest level since late 2002 (down 4 points to +7 index points: a fall of 10 points over the past 3 months), while business confidence fell to the lowest level since September 11 (down 2 points to -4 index points).

The Bank said the survey results implies that demand growth has slowed faster than expected: to an annual rate of 3-3.25%. NAB says a further slowing is expected – especially in rate sensitive sectors.

This will see the economy grow at around 2.75% for both 2008 and 2009 – supported by the tax cuts, the farm sector rebound and stronger commodity prices. Unemployment will rise.

The NAB says this means the RBA will not lift interest rates again this year and the “downside risks to growth are increasing despite high inflation.” Therefore rate cuts could start later this year.

But we had our worst ever trade deficit of $3.29 billion in February, not because of rising imports (they were unchanged on January) but falling exports.

Higher coal and iron ore prices are expected to boost export returns from this month onwards. That’s the theory, but so far in this resources boom we have managed to snatch defeat from the jaws of victory several times. It’s why our foreign debt continues to balloon past $610 billion.