There's little headroom for inflation to move up from here without breaking through the Reserve Bank's 2 percent to 3 percent target range.
We currently rate the probability of a rise within three to six months as around a 25% chance.
Credit growth looked to have stabilized last year, now it's accelerated again and it's a fast pace. The housing sector may be starting to pick up again and that's a sign of renewed confidence.
The all too clear messages ... are that they are still concerned that there will be some rise in the underlying rate of inflation and, that given that outlook, they are nowhere near considering any easing in monetary policy.
The economy was struggling to gain traction at the end of last year. We think growth will be restrained in the Australian economy, keeping inflation pressures in check and keeping the Reserve Bank on hold for some time yet.
Australia's economy is increasingly showing some soft edges and inflation is tame. The risks of another rate increase are becoming much less pressing.
