Australian economy to grow a bit faster than 3 per cent: RBA

Christian Edwards
(Australian Associated Press)

Reserve Bank of Australia boss Philip Lowe says there should be no surprises when he makes his quarterly statement on the health of the economy this Friday.

Speaking in Adelaide on Tuesday after the RBA held Australia's official cash rate at its record low 1.5 per cent, Dr Lowe said his upcoming Statement on Monetary Policy "should not contain any surprises".

"This year and next, our central scenario remains for the Australian economy to grow a bit faster than 3 per cent," he told an RBA board dinner function.

While unemployment is lower and lower inflation is returning to around the middle of the target range, the bank expects any progress on these fronts to be gradual.

Dr Lowe said the nation's weak household spending and sluggish wages growth remain a concern for the economy.

"While we might like faster progress, it is encouraging that things are moving in the right direction," he said.

The Reserve Bank board is also closely monitoring global risks including the management of China's "very significant" build-up of debt.

The other prominent concern Dr Lowe flagged was the possible escalation of protectionist measures in the United States and elsewhere.

"The very clear lesson from history is that this would be bad for growth," Dr Lowe said.

"As a country that has prospered through openness, Australia has a lot resting on this not happening."

Dr Lowe said if the economy met the expected performance of a steady gain in wages and inflation, and a gradual reduction in the jobless rate, it was "reasonable to expect that the next move in interest rates will be up".