The Reserve Bank of Australia kept the cash rate at a low of 0.1% Tuesday - as widely expected.
However, data out earlier Tuesday showed data said the country's economic output was above its pre-pandemic level and house prices were shooting through the roof.
Reserve Bank members reaffirmed their commitment to maintaining supportive monetary conditions until at least 2024 when actual inflation is within the 2% to 3% target, the bank said in a statement.
It expects gross domestic product to grow by 4.75% this year and 3.5% in 2022 as a result of fiscal measures and very accommodative financial conditions.
Jobs, inflation and wage pressures are estimated to remain subdued, the RBA said in a statement after the decision.
Consumer prices inflation is projected to rise temporarily to more than 3% in the second quarter "on a reversal of some COVID-19-related price reductions."
The bank "remains committed to the the-year government bond yield target of 10 basis points. At its July meeting, it will consider whether to retain the April 2024 bond as the target bond or to shift to the next maturity."
RBA governor Philip Lowe said: "The economic recovery in Australia is stronger than earlier expected and is forecast to continue. The bank's central scenario is for gross domestic product to grow by 4.75% over this year and 3.5% over 2022. This outlook is supported by fiscal measures and very accommodative financial conditions."
Lowe justified the need for near-zero rates despite a strong economic recovery by saying "inflation and wage pressures are subdued" and a pickup in prices is expected to be only "gradual and modest." "An important source of uncertainty is the possibility of significant outbreaks of the virus," Lowe added.
The RBA's growth forecasts for 2021 are broadly in line with experts and for 2022, are slightly stronger than expectations. Robert Carnell, ING Think's regional head of research, Asia Pacific, agreed that the RBA's statement did have "some more upbeat language on the outlook for growth."
