Australian economic growth and inflation have both been stronger than expected compared with six months ago. The recent pick-up in inflation has been broadly based and our assessment is that some of the increase in inflation has been driven by capacity constraints that are proving greater than previously anticipated. Overall, the economy seems to be further from balance than had been assessed last year. Labour market conditions have been broadly steady in recent months and remain a little tight. The inflation outlook has been revised materially higher and inflation is expected to remain above target for some time. ... (full story)