The Reserve Bank now expects the economy to be speeding along at a 4.75 per cent growth rate at the end of this year, but that has not stopped it from restating that interest rates can be expected to stay low until 2024.
As widely expected, the RBA left the cash rate and other policy measures at a record low 0.1 per cent following its monthly board meeting on Tuesday.
But central bank governor Philip Lowe took the opportunity to reveal some of its latest forecasts ahead of its quarterly statement on monetary policy due on Friday.
That included lifting its growth forecast for this year to 4.75 per cent from 3.5 per cent previously, and lowering its unemployment prediction to five per cent by year-end and 4.5 per cent at the end of 2022.
The jobless rate was 5.6 per cent in March.
"Despite the strong recovery in economic activity, the recent CPI data confirmed that inflation pressures remain subdued in most parts of the Australian economy," Dr Lowe said.
"A pick-up in inflation and wages growth is expected, but it is likely to be only gradual and modest."
He reiterated the cash rate will not increase until actual inflation is sustainably within the two to three per cent target range.
Annual inflation was just 1.1 per cent at the end of March.
The RBA continues to keep a watchful eye on the housing market where prices are rising in all major markets.
"Given the environment of rising housing prices and low interest rates, the bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained," Dr Lowe said.
New figures showed housing loans struck a record high in March with more than half of these going to property investors.
The Australian Bureau of Statistics said new loan commitments rose by 5.5 per cent in March to a record $30.2 billion.
The value of loans to investors soared by 12.7 per cent to $7.8 billion, the largest monthly increase since July 2003.
Owner-occupier home loans rose by 3.3 per cent to $22.4 billion, although demand from first home buyers declined 0.9 per cent in the month.
JP Morgan economist Tom Kennedy said the spike in investors and the drop in first home buyer demand may be challenging the RBA.
"We continue to expect the introduction of macro-prudential measures in coming months," he said.
Other ABS data showed the trade balance of goods and services shrank by more than $2 billion in March to $5.6 billion.
This was the result of a two per cent drop in exports, while imports rose by four per cent.
Meanwhile, confidence among Australians failed to gain the major lift that has been associated with the end of snap COVID-19 lockdowns around the country in the past.
The weekly ANZ-Roy Morgan consumer confidence index - a pointer to future household spending - rose just 0.3 per cent despite the end of Perth's latest brief lockdown.
Confidence among the people of Perth did rise 1.3 per cent, but this was a much smaller response than after its January lockdown.
ANZ head of Australian economics David Plank said this was possibly because another few coronavirus cases had since emerged.
"The bad news out of India has the city and country somewhat on edge," he said.