He reminded the audience that, in 2002, Australia's population was expected to age quickly, with the median age projected to increase "significantly" to over 45 by 2040, but after a decade of increased immigration of younger people, the latest estimate was the median age in 2040 would be around 40 years.
"Over the forecast period, we expect inflation to increase further to be close to 2½ per cent in 2020". The kiwi dollar drifted lower overnight and "we doubt it will have enough momentum to break through those levels today (unless the RBA dramatically surprise), with markets waiting for direction from the RBNZ later this week".
A statement accompanying the decision from Philip Lowe, the central bank's governor, gave a nod to uncertainty over U.S. trade policy as well as household consumption domestically, in addition to noting the toll taken on Australia's farm sector by a recent drought. The governor reiterated that U.S. trade policy is a key uncertainty for the global outlook.
The bank will have more on its forecasts in Friday's third Statement of Monetary policy for 2018 but the statement yesterday indicates that apart from inflation there won't be too much of a change. These higher money-market rates have not fed through into higher interest rates on retail deposits.
"Not surprisingly, the direction of global trade policy continues to be a key source of uncertainty, but importantly, "financial conditions remain expansionary, although they are gradually becoming less so in some countries".
"But the peak in the housing construction cycle, uncertainty about the outlook for consumer spending, the weakening Sydney and Melbourne property markets, low inflation and wages growth and tight bank lending standards all argue against a rate hike".
"This is an important difference, with Australia's faster population growth being one of the reasons our economy has experienced higher average growth than many other advanced economies", Dr Lowe said.
Housing credit growth has declined to an annual rate of 5.5 per cent. "This is likely to continue for a while yet, although the improvement in the economy should see some lift in wages growth over time". This is largely due to reduced demand by investors as the dynamics of the housing market have changed.
"The RBA's own forecasts for decent growth and a gradual rise in inflation along with strong infrastructure investment, rising business investment and strong export volumes argue against a rate cut", he said in a client note. In short, the RBA remains on hold.
Turning to the short term, Lowe said he expected the unemployment rate to fall to 5% over the next few years, and possibly lower.
"Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time", the statement ended.