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The bank has signalled it will hold the cash rate steady until at least 2023.Credit:Nicholas Rider

The decision,which was in line with market expectations,followed the release offigures by CoreLogic showing a further lift in national house values. Dwelling values rose 2.2 per cent in May after a 1.8 per cent jump in April and 2.8 per cent increase in March.

In a statement,Dr Lowe said the economy was recovering more quickly from the coronavirus pandemic than had been expected,driven in part by very low interest rates and government support.

He noted one of the biggest uncertainties facing the economy wasfurther COVID-19 outbreaks.

“An important ongoing source of uncertainty is the possibility of significant outbreaks of the virus,although this should diminish as more of the population is vaccinated,” he said.

Dr Lowe said the jobs market was also improving faster than forecast and there were reports of labour shortages in some parts of the economy. Despite that,inflation and wage pressures remained subdued.

The only area of high price growth was the housing sector,which Dr Lowe said the bank was watching.

“Housing markets have strengthened further,with prices rising in all major markets. Housing credit growth has picked up,with strong demand from owner-occupiers,especially first-home buyers,” he said.

“There has also been increased borrowing by investors. 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.”

Sydney’s median house value increased 3.5 per cent in the month to $1.186 million while Melbourne’s climbed 2.2 per cent to $908,000. So far this year,Sydney’s median value has increased by 15.1 per cent. Over the past 12 months,Darwin’s house values have soared by 21.1 per cent.

Dr Lowe also repeated the bank’s position that it was committed to keeping interest rates low.

“The[bank] board is committed to maintaining highly supportive monetary conditions to support a return to full employment in Australia and inflation consistent with the target,” he said.

“It will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range. For this to occur,the labour market will need to be tight enough to generate wages growth that is materially higher than it is currently. This is unlikely to be until 2024 at the earliest.”

Asia-Pacific economist with job website Indeed,Callam Pickering,said the bank had made clear it would keep interest rates steady until inflation was actually in its inflation target band.

“Right now,the Australian economy is a mile away from justifying tighter monetary policy. The RBA hasn’t hit their inflation target in five years,we haven’t had wage growth of 3 per cent or higher in eight years and the unemployment rate hasn’t been below 4.5 per cent since 2008.

“The RBA doesn’t believe that rates will be increased until 2024. It could well happen sooner,such has been the pace of recovery,but it certainly won’t happen this year and is unlikely next.”

Separate figures from the Australian Bureau of Statistics suggest Wednesday’s national accounts will show the economy growing extremely strongly through the first three months of the year.

Inventories increased by 2.1 per cent in the March quarter and will add about 0.7 percentage points to GDP. Net exports,which analysts had tipped to reduce GDP by up to 1.1 percentage points,were stronger than expected and are now forecast to cut growth by only 0.6 percentage points.

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